The current risk-free rate of return is 4.67%, while the market risk premium is 6.63%. The D'Amico Company has a beta of 0.78. Using the Capital Asset Pricing Model (CAPM) approach, D'Amico's cost of equity is: a. 8.86%. b. 10.82%. C. 10.33%. d. 9.84%.
The current risk-free rate of return is 4.67%, while the market risk premium is 6.63%. The D'Amico Company has a beta of 0.78. Using the Capital Asset Pricing Model (CAPM) approach, D'Amico's cost of equity is: a. 8.86%. b. 10.82%. C. 10.33%. d. 9.84%.
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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![The current risk-free rate of return is 4.67%,
while the market risk premium is 6.63%. The
D'Amico Company has a beta of 0.78.
Using the Capital Asset Pricing Model
(CAPM) approach, D'Amico's cost of equity
is:
a. 8.86%.
b. 10.82%.
C. 10.33%.
d. 9.84%.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F89834df4-d24a-4622-ab9c-9cf5abd3eb8a%2F807437de-8bcd-4fdf-960e-103b1be097f3%2Ffshk6o_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The current risk-free rate of return is 4.67%,
while the market risk premium is 6.63%. The
D'Amico Company has a beta of 0.78.
Using the Capital Asset Pricing Model
(CAPM) approach, D'Amico's cost of equity
is:
a. 8.86%.
b. 10.82%.
C. 10.33%.
d. 9.84%.
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