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 diffe...

a The new rate is Cost of Equity E r i 003 075 013 003 Cost of Equity 003 075 010 ...

Stan had to delay the sale of the common stock as outlined in Problem 9 for six

Question:

Stan had to delay the sale of the 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 on the market had risen to 13%. What was the effect on the by waiting six months, using the four different betas from Problem 9? What do you notice about the increases in the as beta increased?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...