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Suppose a firm is financed with 70% equity and 30% risk-free debt. Assume that the beta of the firm's equity is 1.5, the risk-free rate is 4%, and the expected return on the market is 11%. Compute the company's cost of capital.
Basic Finance, Finance
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If a stock has a beta coefficient of .8 and a required rate of return equal to 11%, while the market return is equal to 12.5%, what is the risk-free rate of return?
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