Suppose you estimate that Company D$$s stock has a volatility

of $20\%$ and a beta of $1\mathrm{.}25.$ Similarly Stock C has a volatility of

$30\%$ and a beta of $0\mathrm{.}55.$

$$ Which stock carries more risk?

$$ Which has more market risk?

$$ If the risk$-$free interest rate is $3\%$ and you estimate the market$$s

expected return to be $8\%,$ calculate the equity cost of capital for

Company D and Company C$.$

$$ Which company has the highest cost of equity capital?