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Year Market Rate of Return Firm Rate of Return
20X0 25% 15 percent
20X1 10% 6 percent
20X2 15% 9 percent
20X3 20% 12 percent

Using the above information compute the beta of the firm.
If the risk-free rate is 4%, and the market rate of return is 14 percent, calculate the required rate of return (cost of equity) for the stock using CAPM.

 

Managerial Economics, Economics

  • Category:- Managerial Economics
  • Reference No.:- M9308424

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