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  3. d) stock f and stock n have had the following retu

d) Stock F and Stock N have had the following returns for the past three...

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Finance

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d) Stock F and Stock N have had the following returns for the past three years: -12%, 10%, 32%; and 15%, 6%, 24%, respectively. Calculate the covariance between the two securities. 5 marks e) The market value of XYZ Corporation's common stock is $40 million and the market value of its risk-free debt is $60 million. The beta of the company's common stock is 0.8, and the expected market risk premium is 10%. If the Treasury bill rate is 6%, what is the firm's cost of capital? (Assume no taxes.) 5 marks

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