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30.11.2020 •
Business
You know that the return of Cullumber Cyclicals common shares is 1.0 times as sensitive to macroeconomic information as the return of the market. If the risk-free rate of return is 2.40 percent and market risk premium is 5.71 percent, what is Cullumber Cyclicals’ cost of common equity capital?
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Ответ:
8.11%
Explanation:
Cullumber Cyclicals beta = 1 since its sensitive to macroeconomic information (the whole market) is 1.
cost of equity (Re) = risk free + (beta x market premium)
Re = 2.4% + (1 x 5.71%) = 2.4% + 5.71% = 8.11%
Since the beta is 1, this specific stock should perform exactly like the market.
Ответ:
engine assembler, survey reasearcher, auditor