The risk-free rate of return is 4 and general motors has a


1. Your estimate of the market risk premium is 7%. The risk-free rate of return is 4% and General Motors has a beta of 1.6. What is General Motors’ cost of equity capital?

A. 15.2%

B. 14.4%

C. 16.0%

D. 13.7%

2. One More Time Software has 10.6 percent coupon bonds on the market with 9 years to maturity. The bonds make semiannual payments and currently sell for 93.3 percent of par.

What is the current yield on the bonds?

What is the YTM?

What is the Effective annual yield?

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Financial Management: The risk-free rate of return is 4 and general motors has a
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