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    Financial Reporting Study Set 2
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    Exam 11: Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach
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    Suppose a Firm Has a Market Beta of 1
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Suppose a Firm Has a Market Beta of 1

Question 1

Question 1

Essay

Suppose a firm has a market beta of 1.34 and the risk free interest rate is 5.3%.In addition,the excess return over the risk-free rate is 5.9%.Calculate the firm's cost of equity capital using the CAPM model.

Correct Answer:

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