Estimate the equity cost of capital of a listed bank on Tadawul using the capital asset...

 

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Estimate the equity cost of capital of a listed bank on Tadawul using the capital asset pricing model (CAPM) with the following information (set up the formula and show your work): A newly issued 10-year Government Bond has an annual yield of 4%. The Index for TASI was at 5000 five years ago and now is at 7095 The average yield of a 10-year Government Bond over the past 5 years is 3% The average P/E ratio for the Market over the past 5 years is 14 The Annualized Dividend Yield for the Market over the past 5 years is 3.5% Beta for the listed company is 3/4ths the Market Betal Beta of the Banking sector is 1.1 Estimate the equity cost of capital of a listed bank on Tadawul using the capital asset pricing model (CAPM) with the following information (set up the formula and show your work): A newly issued 10-year Government Bond has an annual yield of 4%. The Index for TASI was at 5000 five years ago and now is at 7095 The average yield of a 10-year Government Bond over the past 5 years is 3% The average P/E ratio for the Market over the past 5 years is 14 The Annualized Dividend Yield for the Market over the past 5 years is 3.5% Beta for the listed company is 3/4ths the Market Betal Beta of the Banking sector is 1.1

Answer rating: 100% (QA)

The equation for the CAPM is Cost of Equity Risk Fr... View the full answer