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Debt to Equity Ratio

In order to f...

Question

In order to find out the Cost of Equity under Capital Asset Pricing Model(CAPM), which of the following is not required?

A

Beta Factor

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B

Market Rate of Return

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C

Market Price of Equity Share

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D

Risk-free Rate of Interest

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Solution

The correct option is C Market Price of Equity Share
The formula to find the cost of capital using CAPM i.e, Capital Asset Pricing Model is as follows:
[Risk-free Rate of Interest + Beta Rate x (Market Rate of Return - Risk-free Rate of Interest)].

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