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MBA, Ph.D in Management
Harvard university
Feb-1997 - Aug-2003
Professor
Strayer University
Jan-2007 - Present
Problem 8. Using the capital asset pricing model (CAPM): A stock has a beta of 1.65, and the projected return on the market is 12.25 percent, with a risk-free rate of 4.75 percent. Calculate the projected return on this stock.
Problem 9. Calculating cost of equity: The Denton Corporation's common stock has a beta of 1.45 and a risk-free rate of 5.75 percent. What is Denton's cost of equity if the projected return on the market is 13 percent?
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In the attached file is my attempt. 8 and 9 are incorrect.
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If you could solve 8 and 9 while showing the work on how you solved it would help me understand the next assignment.
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