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UESTION 4. You work for a bank that is considering a direct investment into Thailand...

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UESTION 4. You work for a bank that is considering a direct investment into Thailand to serve the Thai market. Your firm is listed on a US exchange, with an estimated stock beta of 0.75. ABC is a Thai bank with a similar capital structure to your firm's, and is also listed on a US exchange, with an estimated stock beta of 2.0. The US risk free rate is 2%, and the expected market return is 6%. Using the CAPM model, calculate the most appropriate cost of equity capital for your firm to use in analysing its direct investment opportunity

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