CAP Inc'S Stock Is Trading at $40

question 16

Multiple Choice

CAP Inc.'s stock is trading at $40. Its beta in the capital asset pricing model (CAPM) is 1.3. The one-year risk-free rate of interest is 2% and the equity premium for one year is assumed to be 6%, both in simple terms. The stock pays no dividends. Use simple interest for compounding. The one-year forward price of CAP's stock is:

• A) $40.80
• B) $42.40
• C) $43.20
• D) $43.92

Understand the concept and importance of business planning in starting and operating a business.

Identify the stages of the life cycle of entrepreneurial firms and their characteristics.

Recognize the key factors that contribute to the success or failure of small businesses.

Understand the support systems available for small businesses, including business incubators and development centers.

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Definitions:

Stressors

Factors or experiences that cause stress in an individual.

Ethologists

Scientists who study the behavior of animals in their natural environments, focusing on instinctual or innate behaviors.

Neo-Freudians

Psychoanalytic theorists who modified the original theories of Freud.

Innate

A quality, ability, or knowledge that is present from birth, not acquired or learned through experience.