The Management of Quills and Ink Want to Calculate the Required

question 22

Multiple Choice

The management of Quills and Ink want to calculate the required rate of return (ROR) of the company.The following information is available: $$\begin{array} { l l } \text { Risk free rate } & 5.30 \% \\\text { Equity risk premium } & 4.24 \% \\\text { Firm size premium } & 2.16 \% \\\text { Industry risk premium } & 6.50 \% \\\text { Specific company risk premium } & 3.00 \%\end{array}$$ Calculate the ROR of Quills and Ink.

• A) 16.96%
• B) 21.20%
• C) 18.20%
• D) 19.40%

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Definitions:

Magma Chamber

A magma chamber is a large pool of liquid rock beneath the surface of the Earth, where magma accumulates before a volcanic eruption.

Pillow Basalt

A volcanic rock formation characterized by rounded, pillow-shaped masses, formed when lava extrudes underwater and cools rapidly.

Fissure Eruption

A volcanic eruption through a crack or fissure in the earth's surface, often producing long linear volcanoes.

Valles Caldera

A large volcanic caldera located in the Jemez Mountains of northern New Mexico, known for its hot springs and geothermal activity.