Capital asset pricing model is a widely used technique to calculate the expected rate of return for equity investment. It considers the beta or systematic risk, expected market return and risk free rate to calculate the expected rate of return on equity investment. E(R) = RFR + β [E(Rm) –RFR] Where, E(R) = Expected rate […]Continue Reading... No Comments.
There are lots of methods available to the analysts to calculate the cost of equity. Among them, 2 methods are used most widely which are Discounted Cash Flow (DCF) approach Capital Asset Pricing Model (CAPM) Discounted Cash Flow (DCF) approach is further divided into two methods depending on the growth of the company. These methods […]Continue Reading... No Comments.