The cost of equity for Tangshan Mining would be roughly 10 percent if the expected return on U.S.Treasury Bills is 2 percent,the market risk premium is 6 percent,and the firm's beta is 1.33.

Question

Quizplus · Accepted Answer

The cost of equity using the Capital Asset Pricing Model (CAPM) is calculated as follows:

Cost of equity = Risk-free rate + Beta x Market risk premium
= 2% + 1.33 x 6%
= 10%

Therefore, the statement is true.

The Cost of Equity for Tangshan Mining Would Be Roughly