Definition for : Cost of equity
Cost of Equity is equal to the Risk-free rate plus a Risk premium that reflects the Stock's Systematic risk: ke = rf + Beta x (RM rf), where ke is the cost of Equity, rf is the Risk-free rate, RM is the expected Market return, and Beta is the Beta of the Share. Cost of Equity is also called Cost of shareholders' equity.
(See Chapters 19 and 23 of the Vernimmen)
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