The Risk-Free Rate Is 4

question 81

Multiple Choice

The risk-free rate is 4.15 percent.What is the expected risk premium on this stock given the following information?

• A) 5.88 percent
• B) 5.95 percent
• C) 6.10 percent
• D) 6.23 percent
• E) 6.27 percent

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and often pays dividends at a fixed rate.

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company's earnings.

Owners

Individuals or entities that possess legal rights and control over a business or asset.

Public Corporation

A Public Corporation is a company that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or in the over-the-counter market.