1. Stock in Country Road Industries has a beta of 0.8. The market risk premium is 7 percent, and T-bills are currently yielding 5 percent. The company's most recent dividend was $1.7 per share, and dividends are expected to grow at a 5.5 percent annual rate indefinitely. If the stock sells for $39 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)
10.35%
8.55%
10.1%
6.6%
10.6%
2. The Up and Coming Corporation's common stock has a beta of 1.3. If the risk-free rate is 4 percent and the expected return on the market is 13 percent, what is the company's cost of equity capital? (Do not round your intermediate calculations.)
16.33%
14.91%
16.48%
15.7%
20.9%
3. When you engage in one of the following stock transactions, you are participating in a primary market transaction.
a. an initial public offering
b. a limit order
c. A stop loss order
d. A purchase on the margin
e. a discretionary transaction