Cost of equity is using capital asset pricing model

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In the chapter 13 mini case, Petrobras’s cost of equity is estimated using the CAPM (Capital Asset Pricing Model). Observe that Petrobras’s beta has been calculated using the NYSE stock index as the market portfolio. (This is mentioned on page 345.) Do you agree with this choice of the market portfolio? Or would you use an index of the Brazilian stock market? Or some global market index? Justify your answer.

Reference no: EM131075766

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