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# Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%.

9-14. Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%.I am buying a firm with an expected perpetual cash flow of $1,000 but am unsure of its risk. If I think the beta of the firm is .5, when in fact the beta is really 1, how much more will I offer for the firm than it is truly worth?(BODIE, Zvi. Investments, 8th Edition. Irwin/McGraw-Hill, 062008. 17.7.3). <vbk:9780073382371#outline(17.7.3)>