What is the beta and cost of equity of titan stock

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Titan Corporation has 8 million shares of common stock outstanding with a price of 25 per share. Correlation between stock returns of Titan and returns of S&P 500 index is 0.9.

The standard deviations of stock returns for Titan stock and S&P 500 index are 12% and 9.5%, respectively. The market return is 12%, and the T-bills are yielding 4%. Titan's tax rate is 30%.

Problem 1: Titan currently has 30,000 4% annual coupon bonds outstanding (Par value =1,000). The bonds will mature in 15 years and are currently priced at $1,100 per bond. What is the beta and cost of equity of Titan's stock ?

Reference no: EM132878704

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