1. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks using CAPM model you are required to find the risk-free rate of the new stocks having the cost of 30% with a beta of 4., and a market risk premium of 7%. 2. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks using CAPM model you are required to find the beta of the new stocks having the costs of 10% with a risk-free rate of 5% and a market risk premium of 15%. 3. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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1. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks,
using CAPM model you are required to find the risk-free rate of the new stocks having the cost
of 30% with a beta of 4., and a market risk premium of 7%.
2. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks,
using CAPM model you are required to find the beta of the new stocks having the costs of 10%
with a risk-free rate of 5% and a market risk premium of 15%.
3. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks,
using CAPM model you are required to find the market rate of return of the new stocks having
the cost of 20% with a beta of 2, and a market risk premium of 7%.
Transcribed Image Text:1. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks, using CAPM model you are required to find the risk-free rate of the new stocks having the cost of 30% with a beta of 4., and a market risk premium of 7%. 2. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks, using CAPM model you are required to find the beta of the new stocks having the costs of 10% with a risk-free rate of 5% and a market risk premium of 15%. 3. A company is in dire need of a fund and is planning to invest by issuing new ordinary stocks, using CAPM model you are required to find the market rate of return of the new stocks having the cost of 20% with a beta of 2, and a market risk premium of 7%.
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