The Risk Free Rate of Return Is 2

question 25

Multiple Choice

The risk free rate of return is 2.5% and the market risk premium is 8%.Penn Trucking has a beta of 2.2 and a standard deviation of returns of 28%.Penn Trucking's marginal tax rate is 35%.Analysts expect Penn Trucking's dividends to grow by 6% per year for the foreseeable future.Using the capital asset pricing model,what is Penn Trucking's cost of retained earnings?

• A) 16.4%
• B) 17.7%
• C) 19.6%
• D) 20.1%

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Definitions:

Urgency

A sense of importance requiring swift action.

Free-rein Followers

Individuals who prefer minimal supervision, requiring leaders to trust in their ability to work independently toward goals.

Task Forces

Special groups set up to achieve a specific goal, often characterized by their temporary nature and focused objective.

Independent Projects

Independent projects are tasks or initiatives undertaken without the direct oversight or involvement of a larger organization, allowing for autonomy and self-direction.