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Calculate the beta for the stock

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Reference no: EM132907922

Problem 1: The annual returns for three years for stock B were 0 percent, 10 percent, and 26 percent. Annual returns for three years for the market portfolio were +6 percent, 18 percent, and 24 percent. Calculate the beta for the stock.

Option 1: 0.75
Option 2: 1.36
Option 3: 1.00
Option 4: 0.74

Problem 2: The market value of Charter Cruise Company's equity is $15 million and the market value of its debt is $5 million. If the required rate of return on the equity is 20 percent and that on its debt is 8 percent, calculate the company's cost of capital. (Assume no taxes.)

Option 1: 20 percent
Option 2: 17 percent
Option 3: 14 percent
Option 4: 11 percent

Reference no: EM132907922

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