The cost of equity capital is:
A)the expected return on the firm's stock that investors require
B)frequently estimated by using the Capital Asset Pricing Model (CAPM)
C)generally considered to be a linear function of the systematic risk inherent in the security
D)all of these

Question

Quizplus · Accepted Answer

The cost of equity capital is the expected return that investors require on the firm's stock, and it is often estimated using the CAPM. The CAPM assumes that the cost of equity capital is a linear function of the systematic risk or beta of the security. Therefore, all of the given options are correct.

The Cost of Equity Capital Is