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9. Gost of equity: SML. Stan is expanding his business and will sell common stock for the needed funds. If the current risk-free rate is 4% and the expected market return is 12%, what is the cost of equity for Stan if the beta of the stock is a. О.75? b. 0.90? с. 1.05? d. 1.20?

9. Gost of equity: SML. Stan is expanding his business and will sell common stock for the needed funds. If the current risk-free rate is 4% and the expected market return is 12%, what is the cost of equity for Stan if the beta of the stock is a. О.75? b. 0.90? с. 1.05? d. 1.20?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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#9 Cost of equity

**Question 9: Cost of Equity Using the Security Market Line (SML)** Stan is expanding his business and will sell common stock to acquire the necessary funds. Given that the current risk-free rate is 4% and the expected market return is 12%, calculate the cost of equity for Stan if the beta of the stock is: a. 0.75 b. 0.90 c. 1.05 d. 1.20 *Note: There are no graphs or diagrams associated with this question.*
Transcribed Image Text:**Question 9: Cost of Equity Using the Security Market Line (SML)** Stan is expanding his business and will sell common stock to acquire the necessary funds. Given that the current risk-free rate is 4% and the expected market return is 12%, calculate the cost of equity for Stan if the beta of the stock is: a. 0.75 b. 0.90 c. 1.05 d. 1.20 *Note: There are no graphs or diagrams associated with this question.*
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