Question
1. The stock of Yakir Development has a beta of 1.31. The risk-free rate of return is 1.5 percent and the market rate of return
1. The stock of Yakir Development has a beta of 1.31. The risk-free rate of return is 1.5 percent and the market rate of return is 8 percent. What is the risk premium on this stock?
| A. | 0.90% | |
| B. | 8.51% | |
| C. | 6.50% | |
| D. | 7.00% |
2.
Castillo Corporation common stock is currently priced at $39.75 per share. The companys expected annual dividend is $4.68 per share. The dividends have been increasing by 7.5 percent annually and are expected to continue doing the same. What is the cost of equity?
| A. | 19.26% | |
| B. | 8.25% | |
| C. | 18.44% | |
| D. | 10.92% |
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Understanding Financial Risk Management
Authors: Angelo Corelli
1st Edition
0415746183, 978-0415746182
