The decision to use the industry beta or the company beta to estimate the cost o

Question

The decision to use the industry beta or the company beta to estimate the cost of capital depends on: how small the estimation errors are of all betas. the stability of the company beta estimate over time. how similar the firm's operations are to the operations of all other firms in the industry. All of the above. b and c only. In a semi-strong form informational efficient stock market, investors can outperform the market with investment strategies that base on historical stock price and trading volume patterns. undisclosed insider information concerning the company. fundamental financial statement information of the company. None of the above. If the average return on large cap stocks was 11.6%, the average Treasury bill rate was 3.3%, and the average inflation rate was 3.0%, what would be the expected return for large cap stocks if the Treasury bill rate were expected to be 3.1% and the inflation rate 2.6%?

Explanation / Answer

The answer is B and c only

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