According to the CAPM, what must be the risk-free rate if the expected return on a firm's common shares with beta of 2 is 18%, and the expected return on the market stock index is 12%? a) b) c) d) a) b) c) 2% Refer to Question above. What will be the firm's cost of equity if it issues new common shares at $25 per share and the issuing expenses are 4% per share? d) 4% 6% 8% 24% 20% 18.75% 16%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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According to the CAPM, what must be the risk-free rate if the expected return on a firm's common shares with beta of 2 is
18%, and the expected return on the market stock index is 12%?
a)
b)
c)
d)
a)
b)
c)
2%
Refer to Question above. What will be the firm's cost of equity if it issues new common shares at $25 per share and the
issuing expenses are 4% per share?
d)
4%
6%
8%
24%
20%
18.75%
16%
Transcribed Image Text:According to the CAPM, what must be the risk-free rate if the expected return on a firm's common shares with beta of 2 is 18%, and the expected return on the market stock index is 12%? a) b) c) d) a) b) c) 2% Refer to Question above. What will be the firm's cost of equity if it issues new common shares at $25 per share and the issuing expenses are 4% per share? d) 4% 6% 8% 24% 20% 18.75% 16%
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