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What is a firm's weighted-average cost of capital if the stock has a beta of 1.45, Treasury bills yield 5%, and the market portfolio offers an expected return of 14%? In addition to equity, the firm finances 30% of its assets with debt that has a yield to maturity of 9%. The firm is in the 35% marginal tax bracket.
Slope
In mathematics and economics, it's the measure of the steepness or incline, often used to describe a change in a variable in relation to a change in another variable.
45-degree Line
In economics, a reference line that represents where the quantity demanded equals the quantity supplied.
Indeterminate
A state in which something cannot be exactly established, known, or decided.
Positive
A descriptor indicating an increase, growth, or beneficial effect in a particular context.
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