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9. What is the standard deviation and expected return of a stock that has a 20% chance a boom in the market creating a 70%
9. What is the standard deviation and expected return of a stock that has a 20% chance a boom in the market creating a 70% return and an 80% chance of a correction in the market generating a -20% return? (hint: first solve for expected return by using the probabilities of each return multiplied by the return in that scenario then adding the products together) 10. What is the weighted average cost of capital for a company that finances its business with 70% bonds that have a yield to maturity of 8% and 30% common stock that have a required rate of return of 8%? (the applicable tax rate is 30%) Why do you think this company wouldn't just finance with 100% bonds
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