According to the yield curve the appropriate risk free rate, Ask an Expert

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According to the yield curve, the appropriate risk free rate (i.e. a 10Y US Bond) is 3.0% and the Market Risk Premium is 12.0%. A stock has sensitivity of 1.2x the move in the broad equity market (i.e. Beta = 1.2). According to the Security Market Line Method, the appropriate cost of equity is:

A) 13.8%

B) 14.4%

C) 16.8%

D) 17.4%

E) 21.0%

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92424860

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