Question: If an asset's beta is 0.8, the expected return on the equity market is 10%, the retention ratio is 0.7, the dividend growth rate is
If an asset's beta is 0.8, the expected return on the equity market is 10%, the retention ratio is 0.7, the dividend growth rate is 5%, and the appropriate discount rate for the Gordon model is 9%, the risk-free rate must be closest to:
A) 5.0%.
B) 3.8%.
C) 2.5%.
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