In applying the CAPM to estimate the cost of equity capital, which of the following elements is not subject to dispute or controversy?
A)Expected rate of return on the market, rM .
B)The stock's beta coefficient, βi.
C)Risk-free rate, rRF.
D)Market risk premium (MRP).
E)All of the above are subject to dispute.

Question

Quizplus · Accepted Answer

All elements involved in the CAPM, including the expected market return, beta, risk-free rate, and market risk premium, can be subject to dispute due to varying assumptions, estimations, and market conditions.

In Applying the CAPM to Estimate the Cost of Equity