Question: Stan had to delay the sale of the common stock
Stan had to delay the sale of the common stock as outlined in Problem 9 for six months. When he finally did sell the stock, the risk-free rate had fallen to 3%, but the expected return on the market had risen to 13%. What was the effect on the cost of equity by waiting six months, using the four different betas from Problem 9? What do you notice about the increases in the cost of equity as beta increased?
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