1. The estimated beta for RDG is 0.74. The risk free rate of return is 4 percent and the Equity Risk Rremium is 5 percent. What is the required rate of return for RDG using the CAPM?
   1. 15.2%
   2. 12.3%
   3. 10.1%
   4. 7.7%

1. MDX has a current beta of 6. The market risk premium is 7 percent and the risk-free rate of return is 3 percent. By how much will the cost of equity increase if the company expands their operations such that their company beta rises to 1.9?
   1. 2.1%
   2. 3.4%
   3. 4.5%
   4. 5.6%
2. Investors will pay an amount _____________ the face amount of a bond if the coupon rate on bonds is _____________ the market interest rate.
   1. Greater than, greater than
   2. Lower than, greater than
   3. Greater than, lower than
   4. Greater than, equal to