The beta, , calculated above for FDX is 1.73, the yield to maturity on a 10- year Treasury Bond (risk free rate) is 0.66%: http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=vield The stock market risk premium [Im - Id] is 5.5%. Using the Capital Asset Pricing Model (CAPM), calculate the cost of equity capital for FDX. FDX stock's required rate of return, using the Capital Asset Pricing Model: LEDX = Frf + [rm -rf BFDX 2014 LEDX = 14.04 (A) Please Explain what Beta (6) is and how is it used to determine the cost of equity capital? In this case for FDX. 1. The annual (%) returns, assumed for years 2009-2019 (11-years) for both FedEx stock (FDX) and the NYSE Index, are shown below. The regression below to estimates the beta (B) for FDX: YEAR FedEx NYSE INDEX (FDX-MeanYNYSE-Mean) 2009 -1.03% 13.48% 14.70 2010 -16.97 -4.92 171.53 2011 -47.64 -41.11 2379.02 2012 96.64 41.55 3519.01 2013 3.00 12.06 -43.63 0.96 -0.09 14.70 2015 6.64 9.59 -5.60 2016 36.5 346.95 2017 26.04 4.88 51.45 2018 7.06 3.75 -0.54 2019 -30.93 -16.55 715.49 Mean 7.38997 2.12 SUM 7163.07 Variance 1436.7 413.75 COVARIANCE 716.31 Std. Dev 37.90 20.34 CORRELATION 0.93 BETA 1.73 REGRESSION OUTPUT: Regression Statistics Multiple R 0.929009 R Square 0.863058 Adjusted R 0.847842 Standard E 14.7853 Observatio 11 ANOVA df SS MS F ignificance F Regression 1 12399.52 12399.52 56.72105 3.57E-05 Residual 9 1967,447 218.6052 Total 10 14366.96 Coefficientsandard Erret Stat P-value Lower 95% Upper 95%ower 95.0%pper 95.0% Intercept 3.717607 4.484525 0.828986 0.42855 -6.42709 13.86231 -6.42709 13.86231 X Variable 1.731149 0.229859 7.531338 3.57E-05 1.211171 2.251127 1.211171 2.251127 (B) Explain the significance of the cost of equity capital for FDX or any other stock