ABC Stock Has a Beta That Is 13 Percent Higher

question 59

Multiple Choice

ABC stock has a beta that is 13 percent higher than the overall market beta.The risk-free rate is 3.1 percent,and the market rate of return is 10.6 percent.What is the company's cost of equity?

• A)12.27%
• B)10.91%
• C)11.58%
• D)15.48%
• E)16.08%

---

Definitions:

American Opportunity Tax Credit

A financial credit for approved higher education expenses incurred for an eligible learner within the first four years of their tertiary education.

Lifetime Learning Credit

A tax credit that helps defray the cost of post-secondary education by reducing the amount of tax owed on a return, dollar for dollar.

Felony Drug Conviction

A conviction for a drug-related crime that is classified as a felony, which can impact an individual's eligibility for certain benefits, employment, or licensing.

American Opportunity Tax Credit

A deduction for eligible educational expenses incurred for a qualifying student during the initial four years of post-secondary education.