Assume the historical return for ABC Company is 11.5% and its beta is .5. Further assume that
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Question:
Assume the historical return for ABC Company is 11.5% and its beta is .5. Further assume that the risk-free rate of return is 3% and the standard deviation is 30%. Based on these factors (using the Capital Asset Pricing Model) calculate the cost of equity.
A. 8.5%
B. 4.25%
C. 6.25%
D. 7.30%
Related Book For
Fundamentals of Investments
ISBN: 978-0132926171
3rd edition
Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey
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