Question: The only difference between the Build - up Method and the Modified Capital Asset Pricing Model is: a . Risk free rate b . Size

The only difference between the Build-up Method and the Modified Capital Asset Pricing Model is:
a. Risk free rate
b. Size premium
c. Equity risk premium
d. Beta
e. Company specific risk factor

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

You are thinking of buying a stock priced at $100 per share. Assume that the risk-free rate is about 4.5% and the market risk premium is 6.0%. If you think the stock will rise to $117 per share by...

Q:

The cost of capital measure represents a weighted average of what all investors (i.e., banks, bondholders, preferred stockholders, and common stockholders) are requiring on the company's investments...

Q:

Please see the below 50 questions from FIN 101. Q1. Which of the following will most likely result in an increase in discretionary funding needed? a. The company's profit margin increases. b. The...

Q:

7 Problem 12-4 Specific versus Market Risk (LO1) 10 points Figure 12.11 shows plots of monthly rates of return on three stocks versus the stock market index. The beta and standard deviation of each...

Q:

Berry Industries is evaluating four projects for potential inclusion in their 2016 capital budget. The table below contains the cash flows expected for each project. Complete the table for the...

Q:

The firm is IBM Effects of Recapitalization on the Firm's Bond Rating and Cost of Debt You will try to estimate the effect of the proposed change of leverage on the firm's bond rating. You should use...

Q:

Posted this question already but the answer was wrong. Please Help. Don't know how to solve this. Figure 12.11 shows plots of monthly rates of return on three stocks versus the stock market index....

Q:

15) True or False: The standard deviation and variance are "absolute" measures of dispersion, while the coefficient of variation is a "relative" measure of dispersion. 16) Using the Capital Asset...

Q:

E14.5 Cost of capital calculations (revised) From the following data, calculate the cost of capital for operation (WACC). Use the capital asset pricing model to estimate the cost of equity capital....

Q:

please help with last picture "solution" , thank you! 8-8 VALUING THE EQUITY OF A STABLE-GROWTH FIRM The Emerson Electric Company (EMR) was founded in 1890 and is located in St. Louis, Missouri. The...

Q:

Write down the following sentences in predicate logic. a) Every positive real number has a unique positive real root. b) The equationx 2 - x - 1 = 0 has no solutions over the natural numbers

Q:

Milwaukee Tools has annual sales of $2,280,000 and a net profit margin of 8 percent. The annual depreciation expense is $50,000. What is the amount of the annual operating cash flow if the company?...

Q:

The total return on a bond refers to its coupon yield less any commissions paid when the bond is purchased and sold.

Q:

Pharoah Company reported the following amounts for 2022: Raw materials purchased $95,200 Beginning raw materials inventory 5,824 Ending raw materials inventory 5,040 Beginning finished goods...