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The estimated beta for RDG is 0.74. The risk free rate of return is 4 percent...

  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
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