Question: a) The CAPM states that the expected return on a security is positively related to the security's beta. Find the expected return in Stock X,

a) The CAPM states that the expected return on a security

a) The CAPM states that the expected return on a security is positively related to the security's beta. Find the expected return in Stock X, given the beta of 1.5. the risk free of 3%, and expected return on the market of 10%. (4 marks) b) Biltong Electrical currently has a market value of equity of $15 million and the total debt of $1 million. The cost of equity capital is 19% and the cost of debt is 5%. If the company has a marginal tax of 24%. Calculate the weighted average cost of capital (WACC) for Biltong. (6 marks)

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