What figure is a measure of the riskiness of current earnings and the expected growth rate of future earnings and is used to assess the earnings based value of a business?

Question

Quizplus · Accepted Answer

The capitalization rate (also known as cap rate) is a figure that takes into account the riskiness of current earnings and the expected growth rate of future earnings. It is used to assess the earnings-based value of a business, and is commonly used in real estate valuation and business appraisals. The cap rate represents the expected rate of return an investor would require to invest in a property or business, given the level of risk associated with the investment.

What Figure Is a Measure of the Riskiness of Current