The Cost of Equity for Gruwom Corp

question 53

Multiple Choice

The cost of equity for Gruwom Corp. is 8.4%. If the return to the market is 10% and the risk-free rate is 5%, then the equity beta is:

• A) 0.48.
• B) 1.25.
• C) 0.68.
• D) 1.68.

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Definitions:

Demographic Transition Theory

A theory that describes the transition from high birth and death rates to lower birth and death rates as a country or region develops from a pre-industrial to an industrialized economic system.

Industrialization

The process of developing industries in a country or region on a wide scale.

Fertility Rate

The mean number of offspring a woman has during her life in a certain demographic group.

Niger

A landlocked country in West Africa named after the Niger River and known for its diverse cultures and significant natural resources.