MATH 246 Quiz: Quiz 6 No Solutions

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14 Mar 2019
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The answers on this exam are entirely my own work. I neither gave nor received any aid while taking this exam. You have 3 hours to take this exam. Please remember to write your name legibly on every page. This exam will be graded out of 160 points. The number in parentheses for each question is the amount of points assigned to the question. The exam has 8 questions and 19 pages, including this page. The equity cost of capital for st. claire is 7%. The debt cost of capital for st. claire is 2%. Assume the capm is correct and that the market risk premium is positive. Also assume the risk-free rate is positive, but do not make any assumption about the magnitudes of the market risk premium or the risk-free rate. Explain why it is highly unlikely that the stock return has a negative market beta. Safety first, inc. has unlevered free cash flows of mm per year.