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xy Corporation has a beta coefficient of 0
xy Corporation has a beta coefficient of 0.88. Estimate its cost of equity if the risk free rate is 4% and return on the broad market index is 8%.
Select one:
a. 4%
b. 7.52%
c. 8%
d. 7.6%
Expert Solution
Estimate its cost of equity will be
=rf+beta*(market return-rf)
=4%+0.88*(8%-4%)
=7.52%
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