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    Question

    Shares in ABC Co have a beta of 0.8.

    The market is giving a return of 15% and the risk-free rate is 8%

    What will be ABC's cost of equity?

    A 12.0% Correct Answer Incorrect Answer
    B 20.0% Correct Answer Incorrect Answer
    C 12.6% Correct Answer Incorrect Answer
    D 13.6% Correct Answer Incorrect Answer
    E 14.2% Correct Answer Incorrect Answer

    Solution

    Cost of equity = 8% +0.8 (15% -8%) = 13.6%

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