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Cost of Equity Estimation

This deck covers key concepts related to estimating the cost of equity, including the use of specific risk premiums alongside the CAPM model.

Key Terms

Term
Definition
Why might a firm use a specific risk premium in addition to CAPM when estimating cost of equity?
To account for firm-specific risks such as dependence on key management or lack of track record.
What does CAPM stand for in finance?
Capital Asset Pricing Model
TermDefinition
Why might a firm use a specific risk premium in addition to CAPM when estimating cost of equity?
To account for firm-specific risks such as dependence on key management or lack of track record.
What does CAPM stand for in finance?
Capital Asset Pricing Model