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You are in the process of estimating the fundamental value of equity for firm X. When estimating the cost of equity, which of the following
You are in the process of estimating the fundamental value of equity for firm X. When estimating the cost of equity, which of the following would you use for the risk-free rate (RF) and the market risk premium (MRP):
MRP: E(RM-RF) | ||
Estimation period | RF = 3m T.Bills | RF = 10Y T.Bonds |
1972-2021 | 8.04% | 5.47% |
2012-2021 | 16.47% | 14.39% |
Current RF | 2.00% | 4.00% |
A. | MRP = 14.39% and RF = 4% | |
B. | MRP = 5.47% and RF = 4% | |
C. | MRP = 8.04% and RF = 4% | |
D. | MRP = 5.47% and RF = 2% | |
E. | MRP = 14.39% and RF = 2% | |
F. | MRP = 16.47% and RF = 2% | |
G. | MRP = 16.47% and RF = 4% | |
H. | MRP = 8.04% and RF = 2% |
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