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Suppose the market portfolio has an expected return of 10% and a volatility of 20%, while Microsoft's stock has a volatility f 30%.

. Suppose the market portfolio has an expected return of 10% and a volatility of 20%, while Microsoft’s stock has a volatility f 30%.
a. Given its higher volatility, should we expect Microsoft to have an equity cost of capital that is higher than 10%?
b. What would have to be true for Microsoft’s equity cost of capital to be equal to 10%?

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Suppose the market portfolio has an expected return of 10% and a volatility of 20%, while
Microsoft’s stock has a volatility of 30%.
a. Given its higher volatility, should we expect Microsoft to...

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