Question
The risk-free rate is 1.5% and the required return for the market is 8%. Firm Beta Firm 1 1.4 Firm 2 1.2 Firm 3 0.6
The risk-free rate is 1.5% and the required return for the market is 8%.
| Firm | Beta |
| Firm 1 | 1.4 |
| Firm 2 | 1.2 |
| Firm 3 | 0.6 |
Assume that we estimate the cost of equity from retained earnings using the CAPM approach.
What is the cost of equity from retained earnings for Firm 1?
What is the cost of equity from retained earnings for Firm 2?
What is the cost of equity from retained earnings for Firm 3?
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Securitisation Derivatives A Practioner's Handbook
Authors: Mark Aarons, Vlad Ender, Andrew Wilkinson
1st Edition
1119532272, 978-1119532279
