Use the Following Information to Answer the Question(s)below

question 32

Multiple Choice

Use the following information to answer the question(s) below.
Luther Industries has 25 million shares outstanding trading at $18 per share.In addition,Luther has $150 million in outstanding debt.Suppose Luther's equity cost of capital is 13%,its debt cost of capital is 7%,and the corporate tax rate is 40%.
-Which of the following statements is FALSE?

• A)The CAPM states that we should use the risk-free interest rate corresponding to the investment horizon of the firm's investors.
• B)To determine the risk premium for a stock using the security market line,we need an estimate of the market risk premium.
• C)When surveyed,the vast majority of large firms and financial analysts reported using the yields of Treasury Bills to determine the risk-free rate.
• D)The risk-free interest rate is generally determined using the yields of U.S.Treasury securities,which are free from default risk.

Understand pay adjustments such as pay differentials, and their reasons and applications.

Comprehend the components and significance of pay policy lines in compensation management.

Describe job structure, pay level, and pay structure, and understand their interrelations.

Explain the concept of benchmarking and its role in setting competitive pay structures.