In the Figure Above,the Unregulated Market Equilibrium Occurs at a Price

question 231

Multiple Choice

In the figure above,the unregulated market equilibrium occurs at a price of ________ a ton and quantity of ________ tons.

• A) $100; 4,000
• B) $150; 2,000
• C) $150; 4,000
• D) $225; 4,000
• E) $100; 2,000

Understand that the cost of equity is an estimate and not directly observable in the financial markets.

Know the variables affecting the security market line (SML) approach to estimating expected return on a risky asset.

Differentiate between the after-tax cost of debt and the yield to maturity concerning bond prices and interest rates.

Understand how the SML approach assumes constancy in the reward-to-risk ratio and its implications for a firm's cost of equity.