Bond yield is 12% and bond risk premium is 4.5% then cost of common stock would be

The correct answer is C. 16.50%.

The cost of common stock is the expected rate of return that investors require for investing in a company’s stock. It is calculated by adding the risk premium to the risk-free rate of return. The risk premium is the additional return that investors require for investing in a risky asset, such as a stock, over a risk-free asset, such as a Treasury bond.

In this case, the bond yield is 12% and the bond risk

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