Stock in Country Road Industries Has a Beta of 0

question 77

Multiple Choice

Stock in Country Road Industries has a beta of 0.97.The market risk premium is 10 percent while T-bills are currently yielding 5.5 percent.Country Road's most recent dividend was $1.55 per share,and dividends are expected to grow at a 7 percent annual rate indefinitely.The stock sells for $32 a share.What is the estimated cost of equity using the average of the CAPM approach and the dividend discount approach?

• A)13.69 percent
• B)14.06 percent
• C)14.21 percent
• D)14.38 percent
• E)14.50 percent

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Definitions:

Perceptual-Motor Skills

Abilities that involve the coordination of perception and movement, enabling individuals to perform tasks requiring fine or gross motor actions in response to visual or other sensory information.

Habituate

The process by which an individual becomes accustomed to a stimulus and eventually stops responding to it with the same intensity.

Conceptual Understandings

The grasp of ideas, principles, and theories, enabling deep comprehension beyond mere facts or procedures.

Perceptual Cues

Visual or other sensory information that helps an organism understand the environment and make decisions.