CAPM

This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.

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August 16, 2021 at 1:18 pm #631737
nk16
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Hello …
I would like to know that the cost of equity that is found using CAPM method/formula is that geared cost of equity or ungeared…
August 16, 2021 at 2:59 pm #631753
John Moffat
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The equity beta is always used for calculating the cost of equity. The more gearing there is in the company then the higher the equity beta will be and therefore the higher the cost of equity will be.
You really need to watch my free lectures on CAPM.
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