Question
Use the bond-yield-plus-risk-premium method to estimate the cost of equity for Galveston Corp. A US Treasury bond yields 2.4%, the long-term bond for Galveston yields
Use the bond-yield-plus-risk-premium method to estimate the cost of equity for Galveston Corp. A US Treasury bond yields 2.4%, the long-term bond for Galveston yields 4.4%, Galveston's beta is 1.2, the market risk premium is 4.0%, and the bond-yield-plus-risk-premium for Galveston is 3.0%. What is the required return for Galveston stock?
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Mergers, Acquisitions and Other Restructuring Activities
Authors: Donald DePamphilis
8th edition
9780128024539, 128013907, 978-0128013908
