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Unformatted text preview: Which of these firms do you think are appropriate to use as comparables to determine the beta of Ameritrades planned advertising and technology investments? Why? 4. Using the stock price and return data in Exhibits 5 and 6, estimate the CAPM beta and FamaFrench factor sensitivities for the stocks of comparable firms. 5. Estimate the weightedaverage cost of capital for Ameritrades proposed expansion. What riskfree rate do you use? Are the costofcapital estimates similar using the CAPM and FamaFrench threefactor models? Guidelines You may work on the case in groups of 3 or 4 students. Please handin one writeup per group. All members of the group should be prepared to discuss the case in class. State clearly any assumptions you make and provide enough information so that a reader can follow your analysis. I would expect the case writeup to be two to three pages plus supporting tables. The case is included in the course reading packet....
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 Fall '08
 JonathanLewellen
 Finance, Cost Of Capital

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