Required return equal to risk-free rate

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Question 1. Is it possible to construct a portfolio of real-world stocks that has a required return equal to the risk-free rate? Explain.

Question 2. How do you determine the appropriate cost of debt for a company? Does it make a difference if the company's debt is privately placed as opposed to being publicly traded? How would you estimate the cost of debt for a firm whose only debt issues are privately held by institutional investors?

Question 3. There are several celebrated investors and stock pickers frequently mentioned in the financial press who have recorded huge returns on their investments over the past two decades. Is the success of these particular investors an invalidation of the EMH? Explain.

Reference no: EM132790740

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