What is the required return for the company

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Question - As of June the US risk-free rate is approximately 0.159%. Assume for the moment that market risk is 7% due to the pandemic. Answer the following questions:

A. What is the required return for the company you used for the financial analysis project? Show your calculations.

B. The risk-free rate and market risk above define a Security Market Line (SML). If the risk-free rate were to rise to 0.9% next month, how would that change the SML? Explain your answer.

C. Assume instead of the change in B that the market risk declined to a more normal 5% by December. How would that change the SML defined by the original conditions? Explain your answer.

Reference no: EM133016324

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