Use the Table for the Question(s)below

question 46

Multiple Choice

Use the table for the question(s) below.
Consider the following returns:
-The Volatility on Stock X's returns is closest to:

• A)35%.
• B)10%.
• C)13%.
• D)42%.

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Definitions:

Cost of Debt

The effective rate that a company pays on its current debt, including loans and bonds, which can be measured before or after taxes.

Annual Coupon

The annual interest payment made to bondholders, expressed as a percentage of the bond's face value.

Face Value

The nominal value printed on a bond or stock certificate that indicates the amount due at maturity for bonds or the value of a share of a stock.

After-Tax Cost of Debt

The net cost to a company for borrowing funds after factoring in tax deductions on interest expenses.