Use the Information for the Question(s)below

question 27

Multiple Choice

Use the information for the question(s) below.
Suppose that in the coming year,you expect Exxon-Mobil stock to have a volatility of 42% and a beta of 0.9,and Merck's stock to have a volatility of 24% and a beta of 1.1.The risk-free interest rate is 4% and the market's expected return is 12%.
-The cost of capital for a project with the same beta as Merck's stock is closest to:

• A)11.2%.
• B)12.8%.
• C)12.4%.
• D)11.6%.

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Definitions:

Control Group

In an experiment, the group of participants that does not receive the experimental treatment, serving as a comparison to evaluate the effect of the treatment.

Distracting Sounds

Auditory stimuli that divert attention away from a focal task or activity, potentially reducing performance or concentration.

Learning Effectiveness

The degree to which learning objectives are achieved, often measured by the ability to recall or apply knowledge and skills.

Placebo

A safe tablet, medication, or operation given primarily for its mental comfort to the patient, rather than any physical impact.