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Look-Up uses the CAPM security market line to estimate its cost of equity. U.S. Treasury securities yield 2 percent. The expected return on the market
Look-Up uses the CAPM security market line to estimate its cost of equity. U.S. Treasury securities yield 2 percent. The expected return on the market is 7 percent. (Note that an expected return on the market is not the same as a market risk premium.) Look-Up's equity beta is 1.20. What is the Look-Up's equity required return?
A) 2%
B) 8%
C) 9%
D) 4%
E) 10%
F) 3%
G) 7%
H) 1%
I) 6%
J) 5%
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