HI there, My first post. Did I miss the memo where CAPM=WACC like this reading suggests. Question 3 is killing me. I figure 70% equity x equity beta (1.2) not 1. Where does the “1” come from. Is it 1 because that equals market risk as we are dealing with the pension asset only. Probably answered my own question but it’s hazy. But I can’t figure out how we get .087. Can someone shed some light? Thx:)
Problem states Pension Equity Beta = 1