Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.2. The risk-free rate is 4%, and the expected market return is 11%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide. c. Determine Netflix's cost of common stock equity using the CAPM. a. The risk premium on Netflix common stock is ☐ %. (Round to one decimal place)
Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.2. The risk-free rate is 4%, and the expected market return is 11%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide. c. Determine Netflix's cost of common stock equity using the CAPM. a. The risk premium on Netflix common stock is ☐ %. (Round to one decimal place)
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
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Transcribed Image Text:Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.2. The risk-free rate is 4%, and the
expected market return is 11%.
a. Determine the risk premium on Netflix common stock.
b. Determine the required return that Netflix common stock should provide.
c. Determine Netflix's cost of common stock equity using the CAPM.
a. The risk premium on Netflix common stock is ☐ %. (Round to one decimal place)
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