Question $14(1$ point$)$

A risk$-$averse investor would be most likely to purchase a stock where which of the

following conditions is true?

Expected return is less than the required return

Expected return is equal to the required return

Expected return is greater than the required return

Expected return is equal zero

Question $15(1$ point$)$

Gentiva Health Services has a target capital structure of $30$ percent debt and $70$

percent equity. Its pre$-$tax cost of debt estimate is $10$ percent, and its cost of equity

estimate is $16$ percent according to CAPM. It pays federal, state, and local taxes at a

$40$ percent marginal rate. What is the firm's corporate cost of capital?

$12\mathrm{.}5\%$

$13\mathrm{.}0\%$

$12\mathrm{.}1\%$

$15\mathrm{.}4\%$