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2. Suppose the market portfolio has an expected re...

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2. Suppose the market portfolio has an expected return of 10% and a volatility of 20%, while Microsoft?s stock has a volatility f 30%. a. Given its higher volatility, should we expect Microsoft to have an equity cost of capital that is higher than 10%? b. What would have to be true for Microsoft?s equity cost of capital to be equal to 10%?

 

Paper#11878 | Written in 18-Jul-2015

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