The Common Stock of Pedestrian Automotive Has a Beta of 0.89

Multiple Choice

The common stock of Pedestrian Automotive has a beta of 0.89 and a standard deviation of 15.8 percent.The market rate of return is 12.25 percent and the risk-free rate is 2.9 percent.What is the cost of equity for this firm?

A) 11.22 percent
B) 9.16 percent
C) 9.48 percent
D) 11.80 percent
E) 10.45 percent