Garson Ltd has a stock volatility of 7% and a beta of 1.15 while Bravo Ltd has

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Garson Ltd has a stock volatility of 7% and a beta of 1.15 while Bravo Ltd has a volatility of 12% and a beta of 0.7. The risk-free interest rate is 5% and the estimated market expected return is 9%.

Required:

A. Which of the two stocks have higher total risk?

B. Which of the two stocks have higher market risk?

C. Estimate the equity cost of capital for Garson Ltd and Bravo Ltd?

Related Book For answer-question

Financial reporting, financial statement analysis and valuation a strategic perspective

ISBN: 978-0324789416

7th Edition

Authors: James M Wahlen, Stephen P Baginskl, Mark T Bradshaw

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Posted Date: Apr 26, 2023 11:59 PM

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Garson Ltd has a stock volatility of 7% and a beta of 1.15 while Bravo Ltd has

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A To determine which of the two stocks has higher total risk we need to compare their total risk as measured by their total volatility Total volatilit... View the full answer

Financial reporting, financial statement analysis and valuation a strategic perspective

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