Answered: The Gravel Corporation's common stock…

The Gravel Corporation's common stock has a beta of 0.5. If the risk-free rate is 7.9% and the expected return on the market is 12%, what is the company's cost of equity capital?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 4P: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market...

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Question

The Gravel Corporation's common stock has
a beta of 0.5.
If the risk-free rate is 7.9% and the expected
return on the market is 12%, what is the
company's cost of equity capital?

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