alleryStart learning →With Rf 7%, Rm 13% and beta 0.8, what is the CAPM cost of equity?
A13.0%
B12.4%
C11.8%
D10.4%
Answer & Solution
Correct answer: C. 11.8%
The market premium is 6%, and 0.8 x 6 = 4.8, so Ke = 7 + 4.8 = 11.8%.
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