A Common Stock Currently Has a Beta of 1

question 70

Multiple Choice

A common stock currently has a beta of 1.3,the risk-free rate is an annual rate of 6 percent,and the market return is an annual rate of 12 percent.The stock is expected to generate per-share benefits of $5.20 during the coming period.A toxic spill results in a lawsuit and potential fines,and the beta of the stock jumps to 1.6.Assuming zero growth the new equilibrium,price of the stock ________.

• A) will be $37.68
• B) will be $43.33
• C) will be $33.33
• D) cannot be determined from the information given

Comprehend the implications of workforce reduction strategies for an organization.

Grasp how market wage rates can be utilized for forecasting the supply of human resources.

Understand the concept of knowledge, skills, and abilities (KSAs) and their relevance to job families.

Recognize the legal considerations involved in job analysis processes.

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Definitions:

Payback Method

A capital budgeting technique that calculates the time required to recoup the original investment through its cash flows.

Discount Rate

The interest rate charged by central banks for loans to commercial banks, used as a tool in monetary policy to influence the wider economy.

Separate Cash Flow

Separate cash flow refers to the identification and analysis of individual components of the total cash flow of an entity or project.

Financial Calculators

Electronic tools designed to perform financial functions and calculations, such as interest rates, loan payments, investment values, and more.