Aluminum maker Alcoa has a beta of about 1.31, whereas Hormel Foods has a beta of 1.44. If the expected excess return of the market portfolio is 3%, which of these firms has a higher equity cost of capital, and how much higher is it? The firm that has the higher equity cost of capital is by%. (Select from the drop-down menu and round to two decimal places.)

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Aluminum maker Alcoa has a beta of about 1.31, whereas Hormel Foods has a beta of 1.44. If the expected excess return of the market portfolio is 3%, which of these firms has a
higher equity cost of capital, and how much higher is it?
The firm that has the higher equity cost of capital is
C
by%. (Select from the drop-down menu and round to two decimal places.)
Transcribed Image Text:Aluminum maker Alcoa has a beta of about 1.31, whereas Hormel Foods has a beta of 1.44. If the expected excess return of the market portfolio is 3%, which of these firms has a higher equity cost of capital, and how much higher is it? The firm that has the higher equity cost of capital is C by%. (Select from the drop-down menu and round to two decimal places.)
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