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Please help me with this question MKT-11 2. [6] See the CAPM and Fama-French three-factor model (FF3) beta estimates in Table 1 (all betas were
Please help me with this question
MKT-11 2. [6] See the CAPM and Fama-French three-factor model (FF3) beta estimates in Table 1 (all betas were estimated from two years of weekly excess returns) and the factor portfolio annual expected return estimates (based on 1927-2019 data) in Table 2. Note that the annual risk-free rate is 1.2%. Table 1: Betas WMT CAPM WMT FF3 Table 2: Average Annual Return BUKT 0.300 0.434 7.96% -0.406 SMB 2.37% . -0.338 HML 4.33% Estimate the equity cost of capital for Walmart (WMT) based on the CAPM. b. Estimate the equity cost of capital for Walmart (WMT) based on the Fama-French three-factor model (FF3). Are your results in a. and b. above different? Why (or why not)? a. cStep by Step Solution
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