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Suppose you estimate that eBays stock has a volatility of 30% and a beta of 1.45. A similar process for UPS yields a volatility of 35% and a beta of 0.79. The risk-free interest rate is 3% and you estimate the markets expected return to be 8%. a. What is the equity cost of capital for eBay and UPS? b. Which stock carries more total risk? c. Which has more market risk? d. Which company has a higher cost of equity capital?

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Financial Management, Finance

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