Question
Suppose that in the coming year, you expect Exxon-Mobil stock to have a volatility of 42% and a beta of 0.5, and Merck's stock to
Suppose that in the coming year, you expect Exxon-Mobil stock to have a volatility of 42% and a beta of 0.5, and Merck's stock to have a volatility of 24% and a beta of 1.2. The risk-free interest rate is 4% and the markets expected return is 12%.
The cost of capital for a project with the same beta as Exxon Mobil's stock is closest to:
A.8.00%
B.4.00%
C.10.00%
D.14.00%
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Principles Of Finance
Authors: Besley, Scott Besley, Eugene F Brigham, Brigham
4th Edition
0324655886, 9780324655889
