Answer to Question #211410 in Finance for Carol

Question #211410

ABC Corporation has a beta coefficient of 0.88. If the risk-free rate is 4% and return on the broad market index is 8%; calculate the expected return.




1
Expert's answer
2021-06-29T06:12:02-0400

Cost of equity= risk free rate + beta coefficient equity ×(broad market return - risk free rate)

Cost of equity= 4% + 0.88 × (8%-4%)

4% +0.88×4%= 7.52% Answer= 7.52%


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