One way of calculating Keis to use the Capital Asset Pricing model as follows:

Question

Quizplus · Accepted Answer

The capital asset pricing model (CAPM) is widely accepted in the finance industry for calculating the expected return on an asset. The formula Ke = Rf + b(Km - Rf) is the CAPM formula where Rf is the risk-free rate, Km is the market return, and b is the beta coefficient. This formula takes into account the risk-free rate, market return, and systematic risk through beta. Other formulas, such as D1/P0 + g or Rf + b(Km), may not take into account as much information and may not be appropriate for all types of assets.

One Way of Calculating Keis to Use the Capital Asset