Your Estimate of the Market Risk Premium Is 7

question 104

Multiple Choice

Your estimate of the market risk premium is 7%. The risk-free rate of return is 4% and General Motors has a beta of 1.6. What is General Motors' cost of equity capital?

• A) 15.2%
• B) 14.4%
• C) 16.0%
• D) 13.7%

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Definitions:

Hypnotized

Inducing a trance state in someone, during which they exhibit heightened focus, concentration, and suggestibility.

Sister

A female sibling or a woman who shares a close bond with another individual in a brotherly or sisterly context.

Pretending

The act of behaving in a way that is not genuine, or claiming to have feelings, thoughts, or conditions that are not actual, often as a form of play or to fulfill a particular purpose.

Psychologists

Professionals in the field of psychology, which encompasses the scientific study of the mind and behavior, including cognitive, emotional, and social processes.