Last year a Japanese engineering materials corporation, Yamachi Inc., purchased some U.S. Treasury bonds that return an

Question:

Last year a Japanese engineering materials corporation, Yamachi Inc., purchased some U.S. Treasury bonds that return an average of 4% per year. Now, Euro bonds are being purchased with a realized average return of 3.9% per year. The volatility factor of Yamachi stock last year was 1.10 and has increased this year to 1.18. Other publicly traded stocks in this same business are paying an average of 5.1% dividends per year. Determine the cost of equity capital for each year, and explain why the increase or decrease seems to have occurred.

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...