You are considering purchasing Kimberly-Clark stock. Suppose the risk-free interest rate is 4.5 percent and the stock market's expected return is 12.50 percent. Also suppose that if the stock market's value rises by 1 percent, stock in Kimberly-Clark typically rises by 1.0 percent. What is the risk premium for Kimberly-Clark stock? Kimberly-Clark's risk premium is percent. (Enter a numeric response rounded to two decimal places.) What is the correct discount rate to use according to the Capital Asset Pricing Model (CAPM) when analyzing the present value of future cash flows from this stock? The CAPM suggests the correct discount rate is percent. (Enter a numeric response rounded to two decimal places)

You are considering purchasing Kimberly-Clark stock. Suppose the risk-free interest rate is 4.5 percent and the stock market's expected return is 12.50 percent. Also suppose that if the stock market's value rises by 1 percent, stock in Kimberly-Clark typically rises by 1.0 percent. What is the risk premium for Kimberly-Clark stock? Kimberly-Clark's risk premium is percent. (Enter a numeric response rounded to two decimal places.) What is the correct discount rate to use according to the Capital Asset Pricing Model (CAPM) when analyzing the present value of future cash flows from this stock? The CAPM suggests the correct discount rate is percent. (Enter a numeric response rounded to two decimal places)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 12P

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