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6. (10 points) Use the following information to answer the question(s) below. Eenie Meenie Miney Moe Beta 0.45 0.75 1.05 1.20 Standard Deviation 25%
6. (10 points) Use the following information to answer the question(s) below. "Eenie" "Meenie" "Miney" "Moe" Beta 0.45 0.75 1.05 1.20 Standard Deviation 25% 18% 35% 25% Assume that the risk-free rate of interest is 3% and you estimate the market's expected return to be 9%. (1) Which firm has the highest cost of equity capital? (2) If you are a rational investor, which stock you will choose? Eenie or Moe? Eenie or Meenie?
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Fundamental Accounting Principles Volume II
Authors: Larson Kermit, Jensen Tilly
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