14.8 Valuation using the capital asset pricing model Flashcards

1
Q

The capital asset pricing model describes the relationship between which two variables?

A

The relationship between systematic risk and expected return for assets (with the asset usually being stocks)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How is the cost of equity calculated under the capital asset pricing mode?

A

K = risk free rate + beta coefficient x market risk premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly