Questions on CAPM
Hi all,
I recently had an interview with BB IBD for the FT analyst role and had difficulty answering the questions below. Could somebody shed some light on them?
1) Let's assume we create a DCF model for a Chinese company that only operates in China. This company, however, is listed in US. How would you calculate each component of Cost of equity?(Risk-free rate, beta, Equity risk premium)
2) If a buyer is US company, and they are acquiring a Chinese company, How would you calculate each component of Cost of capital?
Thanks
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