Question
You have collected the following information for a company: Market risk premium 7.60% Risk free rate 4.00% Using the data in the Estimate CAPM Cost
You have collected the following information for a company:
Market risk premium | 7.60% |
Risk free rate | 4.00% |
Using the data in the Estimate CAPM Cost of Equity
Ri,t - Rf,t = a + b x [Rm,t - Rf,t] + et
After estimating this stocks beta, use the beta estimate and the information in the table to estimate this companys cost of equity based on the Capital Asset Pricing Model. The estimated alpha (intercept term) should not be used in the calculation of the cost of equity.
Between 0% and 10% | ||
Between 11% and 12% | ||
Between 12% and 13% | ||
Between 13% and 14% | ||
Between 14% and 30% |
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