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ryzh [129]
3 years ago
12

Now assume a risk-free rate of interest of 4%, an expected rate of return on the global market portfolio of 8% and a global beta

of 0.90 then the ICAPM results in a cost of equity of:
Business
1 answer:
never [62]3 years ago
7 0

Answer:

7.6%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Global Beta × (Global Market rate of return - Risk-free rate of return)

= 4% + 0.90 × (8% - 4%)

= 4% + 0.90 × 4%

= 4% + 3.6%

= 7.6%

The (Global Market rate of return - Risk-free rate of return)  is also called global market risk premium

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Answer:

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2 years ago
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Answer:

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3 years ago
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More to the question?
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