Suppose CAPM holds, and the beta of the equity of your company is 2.55. The expected market
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Question:
Suppose CAPM holds, and the beta of the equity of your company is 2.55. The expected market risk premium (the difference between the expected market return and the risk-free rate) is 5.00% and the risk-free rate is 2.75%. Suppose the debt-to-equity ratio of your company is 25% and the market believes that probability of default on your debt is zero. What is the percentage return on assets of your business? (Allow two decimals in the percentage but do not enter the % sign.)
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