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Question 7 Given the following information, what is the cost of equity capital for JJ & Co Pty Ltd? JJ & Co equity returns currently

Question 7

Given the following information, what is the cost of equity capital for JJ & Co Pty Ltd?

JJ & Co equity returns currently have a variance of 0.0465.

The market portfolio has a 7.5% expected return and a variance of 0.04.

The correlation between JJ & Co equity returns and the market portfolio is 0.5.

The risk-free rate is 2% p.a. compounded annually.

O 4.965%

O 5.197%

O 5.391%

0 7.5%

O 8.217%

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