The approach to computing the cost of equity financing that utilizes the Treasury bill rate is called the:

Question

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The Security Market Line (SML) approach to computing the cost of equity financing utilizes the Treasury bill rate as the risk-free rate, which is then adjusted for the risk premium associated with the equity in question. This method is part of the Capital Asset Pricing Model (CAPM), which calculates the expected return on equity based on its beta (systematic risk), the risk-free rate (often the Treasury bill rate), and the market risk premium.

The Approach to Computing the Cost of Equity Financing That