|
Cost of equity ((See Chapters 19 and 23 of the Vernimmen))
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.
|
|
|
|
You get more than just a glossary
on www.vernimmen.com:
- A monthly newsletter with over 60,000
subscribers
- 610,000 financial data for over 16,000
groups
- A 279-question quiz with answers
- A text book that has
sold 130,000 copies
- And all the rest |