- This topic has 5 replies, 2 voices, and was last updated 7 months ago by
.
- Posts
Sir the required rate of return E(ri) is the cost of equity? if yes then why?
The beta of equity determines the return that shareholders require for the level of risk. This is therefore the rate the company has to pay and is the cost of equity.
I do explain all of this in my free lectures on CAPM.
An investor company is a shareholder.
CAPM determines the return that the shareholders will require for the level of risk. That is therefore the return that the investee company has to give them and is thus the cost of equity.
Have you watched my lectures on CAPM?
In future please start a new thread when you are asking about a different topic. It is because many students use our search box to see if their question has already been answered in the past.
The more receivables a company has then the great will be the overdraft (and therefore the more interest payable) or, if they have a cash balance at the bank the the balance will be lower and so they will be losing interest that they could have been earning.
Again, this is all explained in my free lectures. You cannot expect me to type out my lectures again here 🙂
- You must be logged in to reply to this topic.