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Problem 1 (6 Points) Using the Market-Derived Model discussed in class, please estimate the cost of equity capital for Allstate (Ticker: ALL) as of December
Problem 1 (6 Points) Using the Market-Derived Model discussed in class, please estimate the cost of equity capital for Allstate (Ticker: ALL) as of December 3, 2021. Note that on Friday, December 3, the closing price of Allstate Common stock was $ 108.32. Assume that Call Options that expire in January 2024 with an exercise price of $ 110.00 had a closing price of $ 13.00. Further, please indicate any assumptions that you are making regarding the risk-free rate, the expected return on AllState bonds, and the firm's dividend policy
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