Answer: Market test (a)
Explanation:
Market test is an experiment that is usually conducted before the commercialization of a particular product, the outcome of the experiment will determine if such firm will accept the idea of the product or drop it.
Answer:
Cost of Equity 16.33%
Explanation:
We solve for this using CAMP:
risk free = 0.0387
premium market = (market rate - risk free) 0.0903
beta(non diversifiable risk) = 1.38
Ke 0.16331 = 16.33%
We are given with the risk free rate of return and the market premium already so we just need to plug into the formula to solve for the expected return on the stock.
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