Netflix common stock has a beta, b, of 1.8. The risk-free rate is 8%, and the market return is 14%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide. c. Determine Netflix's cost of common stock equity using the CAPM.
Netflix common stock has a beta, b, of 1.8. The risk-free rate is 8%, and the market return is 14%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide. c. Determine Netflix's cost of common stock equity using the CAPM.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Netflix common stock has a beta, b, of 1.8. The risk-free rate is 8%, and the market return is 14%.
a. Determine the risk premium on Netflix common stock.
b. Determine the required return that Netflix common stock should provide.
c. Determine Netflix's cost of common stock equity using the CAPM.
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