1. Moon Co. wishes to determine market return on an asset Z, which has a beta of 2.0. The risk-free rate of return is 5%; and the required rate of return 21%

Select one:

a. 10%

b. 12%

c. 11%

d. 13%

2. Sunny Co. just paid a dividend of $6.25 and is expecting this dividend to grow at a constant rate 8% per year indefinitely. The flotation costs for issuing new common shares of stock are 10%. The company plans to sell 10,000 shares at a price of $50 per share. Calculate the company's cost of common stock

Select one:

a. 22%

b. 21%

c. 20%

d. 23%

3. The time value concept used in amortizing a loan is future value of an annuity

Select one:

True

False