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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?

Beta Factor

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Market Rate of Return

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Market Price of Equity Share

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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)].

Suggest Corrections

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9

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P = \frac{D + \frac{R_{a}}{R_{c}} (E - D)}{R_{c}}

P =

D = D P S

E = E P S

E - D =

R_{a} =

R_{c} =

17 %

6 %

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