Ch 14.pptx - Ch 14 The cost of capital for foreign investments 1 Cost of capital The cost of capital for a given investment is the minimum risk-adjusted

Ch 14.pptx - Ch 14 The cost of capital for foreign...

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Ch 14: The cost of capital for foreign investments 1
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Estimating cost of equity with CAPMCalculate the expected return on an investment with a beta of 0.5 if T-bills return 4% and the market returns 11%. An investor was expecting an 18% return on his portfolio with beta of 1.25 before the market risk premium increased from 8% to 10%. Based on this change, what return will now be expected on the portfolio?
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