A stock has a required return of 8%, the risk-free rate is 3…

A stock has a required return of 8%, the risk-free rate is 3.5%, and the market risk premium is 2.5%. a) What is the stock’s beta? b) If the market risk premium increased to 4%, what is the stock’s new required rate of return? Assume that the risk-free rate and the beta remain unchanged.

A furniture store is offering free credit on purchases over…

A furniture store is offering free credit on purchases over $1,000. You observe that a big-screen television can be purchased for nothing down and $4,000 due in one year. The store next door offers an identical television for $3,650 but does not offer credit terms. Which statement below best describes the cost of the “free” credit?