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The cost of external equity can be most appropriately computed as per the  
  • a)
    earnings price ratio
  • b)
    dividend price ratio
  • c)
    dividend price plus growth ratio
  • d)
    capital asset pricing model
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
The cost of external equity can be most appropriately computed as per ...
The Capital Asset Pricing Model (CAPM) is a model that describes the relationship between the expected return and risk of investing in a security. The cost of external equity can be most appropriately computed as per the capital asset pricing model. It shows that the expected return on a security is equal to the risk-free return plus a risk premium, which is based on the beta of that security.
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The cost of external equity can be most appropriately computed as per thea)earnings price ratiob)dividend price ratioc)dividend price plus growth ratiod)capital asset pricing modelCorrect answer is option 'D'. Can you explain this answer?
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