8. The AMEX Corporation is all equity financed. It has a market… 8. The AMEX Corporation is all equity financed. It has a market value of assets of $1 billion. Therisk free rate is 3% per year. The beta of the company’s common stock with respect to the market(MKT) portfolio is 1.2, the beta with respect to the SMB factor is 1.0, and the beta with respect toHML factor is -1.5. The market (MKT) risk premium is 6%, the risk premium on SMB is 3% andthe risk premium on HML is 3%. What is the company’s cost of equity capital based on theFama-French three factor model?a. 8.7%b. 10.2%c. 17.7%d. 5.7%BusinessFinance OBOE 100
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