Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4%,and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%,and the return on an average stock in the market last year was 15%. Whatis the estimated cost of common equity using the CAPM?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4%,
and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%,
and the return on an average stock in the market last year was 15%. What
is the estimated cost of common equity using the CAPM?

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