asked 202k views
5 votes
Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. I am buying a firm with an expected perpetual cash flow of $1,000 but am unsure of its risk. If I think the beta of the firm is .5, when in fact the beta is really 1, how much more will I offer for the firm than it is truly worth?

asked
User DannyK
by
8.0k points

1 Answer

3 votes
This wouldn’t by chance have multiple choice options would it?
answered
User Editha
by
8.6k points
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