Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 8, Problem 15MC

Assume that Temp Force has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds) is 7.0%, and that the market risk premium is 5%. What is the required rate of return on the firm’s stock?

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Assume that the risk-free and rate is 5.50% and the market risk premium is 7.75%. What is the expected return for the overall stock market (rm)?
Assume that West Corp shares returns required in the market by investors are a function of two economic factors: S1 is 0.04 and S2 is 0.01, where risk-free rate is 7%. West shares have reaction coefficient to the factors, such that S1 = 1.3 and S2 = 0.90. Compute the expected rate of return using the arbitrage pricing model.

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Intermediate Financial Management (MindTap Course List)

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