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%

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Definitions:

Financial Affairs

The management and analysis of money, investments, and other financial instruments by individuals or entities.

Pledged Assets

Assets that are promised as security for the repayment of a loan.

Monetary

Relating to money or currency, particularly in terms of monetary policy or monetary economics.

Collateral

An asset offered as security for repayment of a loan, forfeitable in the event of default.