Your Estimate of the Market Risk Premium Is 6

question 87

Multiple Choice

Your estimate of the market risk premium is 6%. The risk-free rate of return is 4% and General Motors has a beta of 1.4. What is General Motors' cost of equity capital?

• A) 11.2%
• B) 12.4%
• C) 11.8%
• D) 13.0%

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Definitions:

Leadership Prototypes

Preconceived beliefs or expectations about the traits, behaviors, and qualities that characterize effective leaders.

Charismatic Leadership

A leadership style characterized by an individual's ability to inspire and motivate followers through their personality and actions.

Transactional Leaders

Leaders who focus on the routine transactions between the organization and its members, emphasizing clear structures, rewards for performance, and penalties for non-performance.

Expectancy Theory

A motivational theory suggesting that an individual's motivation is influenced by their belief in the effectiveness of their efforts, the value of the rewards for success, and the likelihood that their efforts will lead to expected outcomes.