Post Utme Wellspring University 2019 Commerce Question 22

Practice objective / multiple choice question 22 from the 2019 Post Utme Wellspring University Commerce examination.

Post Utme Wellspring University 2019 Commerce Objective / Multiple Choice
Question 22 POST_UTME_WELLSPRING_UNIVERSITY • 2019 • COMMERCE • objective

A company has a cash reserve of ₦1,500,000 and wants to invest in a project with a required return of 12% per annum. If the project has a beta of 1.2 and the risk-free rate is 6% per annum, calculate the cost of equity using the Capital Asset Pricing Model (CAPM).

Answer Options

Correct Answer A. ( r_e = 6% + 1.2 imes (12% - 6%) )
B. ( r_e = 6% + 1.2 imes (12% + 6%) )
C. ( r_e = 6% + 1.2 imes (12% imes 6%) )
D. ( r_e = 6% + 1.2 imes (12% div 6%) )
Correct Answer
A
Correct Option:
( r_e = 6% + 1.2 imes (12% - 6%) )

About This Question

This is Post Utme Wellspring University 2019 Commerce Question 22. It is one of the objective questions from the 2019 Post Utme Wellspring University Commerce examination.

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