Aluminum maker Alcoa has a beta of about 1.98, whereas Hormel Foods has a beta of 0.44. If the expected excess return of the market portfolio is 6%, which of these firms has a higher equity cost of capital, and how much higher is it? Alcoa's equity cost of capital is _____%.(Round to two decimal places.) Hormel's equity cost of capital is _____%. (Round to two decimal places.) Therefore, (alcoa or hormel) has the higher equity cost of capital by _____ percentage points.(Select from the drop-down menus and round to two decimal places.)
Aluminum maker Alcoa has a beta of about 1.98, whereas Hormel Foods has a beta of 0.44. If the expected excess return of the market portfolio is 6%, which of these firms has a higher equity cost of capital, and how much higher is it? Alcoa's equity cost of capital is _____%.(Round to two decimal places.) Hormel's equity cost of capital is _____%. (Round to two decimal places.) Therefore, (alcoa or hormel) has the higher equity cost of capital by _____ percentage points.(Select from the drop-down menus and round to two decimal places.)
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
Section: Chapter Questions
Problem 1PS
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7. Aluminum maker Alcoa has a beta of about 1.98, whereas Hormel Foods has a beta of 0.44. If the expected excess return of the market portfolio is 6%, which of these firms has a higher equity cost of capital, and how much higher is it?
Alcoa's equity cost of capital is _____%.(Round to two decimal places.)
Hormel's equity cost of capital is _____%. (Round to two decimal places.)
Therefore, (alcoa or hormel) has the higher equity cost of capital by _____ percentage points.(Select from the drop-down menus and round to two decimal places.)
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