Consider Softmike, a software company. Softmikes world market beta is 1.75. Regressing Softmikes return on the world

Question:

Consider Softmike, a software company. Softmike’s world market beta is 1.75. Regressing Softmike’s return on the world market return and the global HML factor gives betas of 1.50 and -1.2, respectively. Assume that the world equity premium is 6%, the HML premium is 3%, and the risk-free rate is 5%. Compute the capital using both the CAPM and the Fama-French model. Is Softmike a value company or a growth company?

Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...