6-18A. (Required rate of return using CAPM) Whimey common stock has a beta of 1.2. The expected...

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6-18A. (Required rate of return using CAPM) Whimey common stock has a beta of 1.2. The expected rate of return for the market is 9 percent and the risk-free rate is S percent.

a. Compute a fair rate of return based on this information.

b. What would be a fair rate if the beta were .8S?

c. What would be the effect on the fair rate if the expected return for the market improved to 12 percent?

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Financial Management Principles And Applications

ISBN: 9780131450653

10th Edition

Authors: Arthur J. Keown, J. William Petty, John D. Martin, Jr. Scott, David F.

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Question Posted: Jul 24, 2024 11:03 AM

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6-18A. (Required rate of return using CAPM) Whimey common stock has a beta of 1.2. The expected...

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Financial Management Principles And Applications

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