The historical profitability of company A in the last three years has been 6%, 15% and 15%.
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Question:
The historical profitability of company A in the last three years has been 6%, 15% and 15%. Likewise, the yields of the market portfolio were 10%, 10% and 16%. Suppose the risk-free rate of return is 4% and investors expect the market to return 10%.
What is the cost of equity (required rate of return on Company A's common shares), calculated using the CAPM?
Related Book For
Statistics For Business And Economics
ISBN: 9780538481649
11th Edition
Authors: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams
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