Cost of equity: SML. Stan is expanding his business and will sell common stock for the needed funds. If the current risk-free rate is 4.0% and the expected market return is 12.0%, what is the cost of equity for Stan if the beta of the stock is a. 0.75? b. 0.90? c. 1.05? d. 1.20? a. What is the cost of equity for Stan if the beta of the stock is 0.75? nothing% (Round to two decimal places.)

a.

The cost of equity is 10% if beta is 0.75

b.

The cost of equity is 11.20% if beta is 0.9

c.

The cost of equity is 12.40% if beta is 1.05

d.

The cost of equity is 13.60% if beta is 1.2

Explanation:

The SML approach is used to calculate the required rate or return (r) which is the minimum return that the investors require to invest in a company's stock. This is also referred to as the cost of equity. The formula for required rate of return under SML is,

r = rRF + Beta * (rM - rRF)

Where,

a.

r = 0.04 + 0.75 * (0.12 - 0.04)

r = 0.10 or 10%

b.

r = 0.04 + 0.9 * (0.12 - 0.04)

r = 0.112 or 11.20%

c.

r = 0.04 + 1.05 * (0.12 - 0.04)

r = 0.124 or 12.40%

d.

r = 0.04 + 1.2 * (0.12 - 0.04)

r = 0.136 or 13.60%

c

explanation:

c because the item on a bank statement is also referred to as an account statement. in addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder's account number, and the bank's customer service number

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know