• Choose a publicly traded company. • Note: Be sure to choose a company that no other classmate has chosen. • Determine its beta from a published source. • Hint: Use Yahoo!Finance or NASDAQ to find the company's beta. ▪ Find the company's financial information by putting the company's name in the search bar. . Calculate the company's cost of equity using the CAPM formula and the short-term risk-free rate assumptions. ▪ Use 8.5 percent as the market risk premium. ▪ Use the current 90-day yield (3-month yield) on U.S. Treasuries as the risk-free rate. Hint: Use the U.S. Department of the Treasury's Resource Center to look up current 90-day (3-month) Treasury Yield Curve Rates. ▪ Provide your calculations in a table in your post. ▪ How Do I Insert a Table Using the Rich Content Editor? B • Calculate the company's cost of equity using the CAPM formula and the long-term risk-free rate assumptions. ▪ Use 7.0 percent as the market risk premium ▪ Use the current 20-year yield on U.S. Treasuries as the risk-free rate. Hint: Use the U.S. Department of the Treasury's Resource Center to look up current 20-year Treasury Yield Curve Rates. ▪ Provide your calculations in a table in your post. ▪ How Do I Insert a Table Using the Rich Content Editor? . Compare the two different conclusions of the company's cost of equity based on your two calculations (based on short-term and long- term risk-free rates). ▪ Hypothesize (rather than calculate) how the different cost of equity estimates would impact the calculation of the weighted average cost of capital for your selected company. ▪ Explain the reasoning of your hypothesis. In your explanation, include a discussion of the company's beta and the amount of debt the company has currently. ▪ Ask at least one question about market risk premiums used in the CAPM formula.
• Choose a publicly traded company. • Note: Be sure to choose a company that no other classmate has chosen. • Determine its beta from a published source. • Hint: Use Yahoo!Finance or NASDAQ to find the company's beta. ▪ Find the company's financial information by putting the company's name in the search bar. . Calculate the company's cost of equity using the CAPM formula and the short-term risk-free rate assumptions. ▪ Use 8.5 percent as the market risk premium. ▪ Use the current 90-day yield (3-month yield) on U.S. Treasuries as the risk-free rate. Hint: Use the U.S. Department of the Treasury's Resource Center to look up current 90-day (3-month) Treasury Yield Curve Rates. ▪ Provide your calculations in a table in your post. ▪ How Do I Insert a Table Using the Rich Content Editor? B • Calculate the company's cost of equity using the CAPM formula and the long-term risk-free rate assumptions. ▪ Use 7.0 percent as the market risk premium ▪ Use the current 20-year yield on U.S. Treasuries as the risk-free rate. Hint: Use the U.S. Department of the Treasury's Resource Center to look up current 20-year Treasury Yield Curve Rates. ▪ Provide your calculations in a table in your post. ▪ How Do I Insert a Table Using the Rich Content Editor? . Compare the two different conclusions of the company's cost of equity based on your two calculations (based on short-term and long- term risk-free rates). ▪ Hypothesize (rather than calculate) how the different cost of equity estimates would impact the calculation of the weighted average cost of capital for your selected company. ▪ Explain the reasoning of your hypothesis. In your explanation, include a discussion of the company's beta and the amount of debt the company has currently. ▪ Ask at least one question about market risk premiums used in the CAPM formula.
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
Related questions
Question
Transcribed Image Text:• Choose a publicly traded company.
• Note: Be sure to choose a company that no other classmate has chosen.
• Determine its beta from a published source.
• Hint: Use Yahoo!Finance or NASDAQ to find the company's beta.
▪ Find the company's financial information by putting the company's name in the search bar.
. Calculate the company's cost of equity using the CAPM formula and the short-term risk-free rate assumptions.
▪ Use 8.5 percent as the market risk premium.
▪ Use the current 90-day yield (3-month yield) on U.S. Treasuries as the risk-free rate. Hint: Use the U.S. Department of the Treasury's
Resource Center to look up current 90-day (3-month) Treasury Yield Curve Rates.
▪ Provide your calculations in a table in your post.
▪ How Do I Insert a Table Using the Rich Content Editor? B
• Calculate the company's cost of equity using the CAPM formula and the long-term risk-free rate assumptions.
▪ Use 7.0 percent as the market risk premium
▪
Use the current 20-year yield on U.S. Treasuries as the risk-free rate. Hint: Use the U.S. Department of the Treasury's Resource Center
to look up current 20-year Treasury Yield Curve Rates.
▪ Provide your calculations in a table in your post.
▪ How Do I Insert a Table Using the Rich Content Editor?
. Compare the two different conclusions of the company's cost of equity based on your two calculations (based on short-term and long-
term risk-free rates).
▪ Hypothesize (rather than calculate) how the different cost of equity estimates would impact the calculation of the weighted average
cost of capital for your selected company.
▪ Explain the reasoning of your hypothesis. In your explanation, include a discussion of the company's beta and the amount of debt the
company has currently.
▪ Ask at least one question about market risk premiums used in the CAPM formula.
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