Company A's Historical Returns for the Past Three Years Are

question 51

Multiple Choice

Company A's historical returns for the past three years are: 6.0%,15%,and 15%.Similarly,the market portfolio's returns were: 10%,10%,and 16%.Suppose the risk-free rate of return is 4%.What is the cost of equity capital (required rate of return of company A's common stock) ,computed with the CAPM?

• A)18%
• B)14%
• C)12%
• D)10%

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Definitions:

Illegal Distribution

involves the unauthorized selling or distribution of goods or services, often violating copyright laws or regulatory statutes.

Liable

Being legally responsible or accountable, often in the context of owing compensation for harm or damage caused.

Dividend

A portion of a company's earnings distributed to its shareholders, usually in the form of cash or additional shares.

Illegal Distribution

The unauthorized distribution of materials or products, violating legal or regulatory standards.