1) Company ABC has a beta of 1.5. The current stock market risk premium is 8%, the 10-year U.S. Treasury bond has a yiel

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1) Company ABC has a beta of 1.5. The current stock market risk premium is 8%, the 10-year U.S. Treasury bond has a yiel

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1) Company ABC has a beta of 1.5. The current stock market riskpremium is 8%, the 10-year U.S. Treasury bond has a yield of 3%.According to CAPM, what is the cost of common equity (withoutfloatation cost) for company ABC?
2) Company CDE’s common stock is currently traded at $40 ashare. It is expected to distribute a dividend of $2 a share nextyear. The average yield to maturity of bonds issued by CDE is 8%.Assume that the CDE’s common stock has a risk premium of 4%relative to its yields. What is the implied growth rate ofdividends expected by market investors?
3)
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