7. Steady Company's stock has a beta of 0.21. If the risk-free rate is 6.2% and...

Question

Question

business finance

Answer 1

Answer #1

As per Capital Asset Pricing Model,

Cost of equity Capital	=	Risk free rate	+	Beta	*	market risk premium
	=	6.2%	+	0.21	*	6.9%
	=	7.6%

Answer 2

Answer #2

SOLUTION :

Cost of equity, r , as per CAPM model :

= rF + b * rP

= 6.2 + 0.21 * 6.9

= 7.649 %

= 7.6% approx.

Cost of equity is = 7.6% (ANSWER)

answered by: Tulsiram Garg

Answer 3

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