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:

Wilcoxon Rank Sum Test

The Wilcoxon Rank Sum Test is a nonparametric statistical test used to compare two independent samples, assessing whether their populations have the same distribution.

Chi-Squared Distribution

A statistical distribution used in hypothesis testing that is the distribution of a sum of the squares of k independent standard normal random variables.

9-point Scale

A scale often used in surveys and research to rate or assess opinions, attitudes, or behaviors, where 1 typically indicates the lowest extent and 9 the highest.

Significance Level

The probability of erroneously rejecting the true null hypothesis in statistical testing, often denoted by alpha.