The Bank of Loans uses the following rating scheme to classify the riskiness of its customers. Risk Class Prime High grade Upper medium grade Risk Premium (%) .05 1.0 1.5 Lower medium grade 2.0 Speculative: Non-investment grade 4.0 Speculative: Highly 6.0 Substantial risks 9.0 12.0 Extremely speculative The bank's pure rate of interest is 3.5% and the inflation premium is 3%. What rate would the bank offer a customer who is in the upper medium grade risk class? A. 6.11% B. 8.73% C. 8.20% D. 6.64% E. 7.68% OF. 7.16% 5 poin Sanaponic, Inc. will pay a dividend of $6 for each of the next 3 years, $8 for each of the years 4-7, and $10 for the years 8-10. Thereafter starting in year 11, the company will pay a constant dividend of $5/year forever. If you require 12 percent rate of return on investments in this risk class, how much is this stock worth to you? OA. $37.77 B. $55.99 C. $34.54 OD. $50.50 E. $41.46 OF. $45.68 QUESTION 15 A stock has a beta of 1.5. The pure rate of interest is 2.75 percent and investors require a 3 percent inflation premium. What is the required rate of return on this stock if the market risk premium is 6 percent? (Hint: First, calculate the risk-free rate using the pure rate and the inflation premium. Next, use this risk-free rate to find the required return on the stock.) A. 14.8% B. 16.5% OC. 15.7% OD. 13.7% O E. 17.4% O F. 12.9% Spoints Save Answer submit. Click Save All Answers to save all answers. Save All Answers Save and Submit 7:41 PM 443 asian025