The cost of equity calculator computes the cost of equity ( `r_a`) for an individual asset, an individual security or portfolio.
INSTRUCTIONS: Enter the following:
Cost of Equit(ra)" The calculator returns the value.
The cost of equity equation is part of the Capital Asset Pricing Model (CAPM). This equation draws a relationship between expected return and systemic risk, beta (`beta`), to compute a theoretically appropriate required rate of return of an asset. That is the relationship represented as the return a stockholder should expect.
The cost of equity represents the cost required in exchange for owning the asset and bearing the risk of ownership.
[1] Capital asset pricing model
Source: Wikipedia
URL: CC Attribution-ShareAlike 4.0 International
Public License: CC Attribution-ShareAlike 4.0 International