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B. Using the SML approach to estimating cost of equity, please estimate it given Return of the market portfolio (Rm)-9%, the risk free rate (Rf)-5.5%
B. Using the SML approach to estimating cost of equity, please estimate it given Return of the market portfolio (Rm)-9%, the risk free rate (Rf)-5.5% and The beta for the stock is 1.4. What happens to the cost of equity if RPm (the risk premium on the market portfolio) goes up to 5%? Calculate the new cost of equity (9 points)
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
