Question
Given the information below, calculate Petrobras cost of equity from the perspective of the internationally diversified investor using World version of CAPM, which includes Sovereign
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Given the information below, calculate Petrobras cost of equity from the perspective of the internationally diversified investor using World version of CAPM, which includes Sovereign Spread (Risk Premium) to account for political risk. Petrobras Betaw is 0.87.
Petrobrs
Capital Cost Components
(Brazil)
Risk Free Rate
4.800%
Sovereign Spread (Risk Premium)
7.000%
World Market Equity Risk Premium
4.500%
A. 18.891%
B. 15.715%
C. 12.891%
D. 8.715%
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Handbook Of Heavy Tailed Distributions In Finance
Authors: S.T Rachev
1st Edition
0444508961, 9780444508966
