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:

Airline Industry

A sector of the economy composed of companies and organizations involved in the business of transporting passengers and cargo by aircraft.

Complex Interdependence

Complex interdependence reflects a situation in international relations where states and their fortunes are interconnected through multiple channels, diminishing the relevance of military power.

Oligopolistic Firms

Companies operating in a market structure characterized by a few dominant firms, with significant control over their pricing and market strategies.

Price Competition

A market situation where businesses attempt to attract customers by undercutting each other's prices.