The Capital Asset Pricing Model (CAPM) is primarily used to calculate the **Cost of Equity**. CAPM assesses the expected return on an asset based on its systematic risk, which is measured by beta. The formula for CAPM is:

$$
\text{Cost of Equity} = R_f + \beta (R_m - R_f)
$$

where:
- $ R_f $ = risk-free rate
- $ \beta $ = beta of the equity (a measure of volatility compared to the market)
- $ R_m $ = expected return of the market
- $ R_m - R_f $ = market risk premium

Thus, the correct answer is **Cost of Equity**.

Question

The Capital Asset Pricing Model (CAPM) is primarily used to calculate the **Cost of Equity**. CAPM assesses the expected return on an asset based on its systematic risk, which is measured by beta. The formula for CAPM is:

$$
\text{Cost of Equity} = R_f + \beta (R_m - R_f)
$$

where:
- $ R_f $ = risk-free rate
- $ \beta $ = beta of the equity (a measure of volatility compared to the market)
- $ R_m $ = expected return of the market
- $ R_m - R_f $ = market risk premium

Thus, the correct answer is **Cost of Equity**.

Knowee AI · Accepted Answer

The Capital Asset Pricing Model (CAPM) is primarily used to calculate the **Cost of Equity**. CAPM assesses the expected return on an asset based on its systematic risk, which is measured by beta. The formula for CAPM is:

$$
\text{Cost of Equity} = R_f + \beta (R_m - R_f)
$$

where:
- $ R_f $ = risk-free rate
- $ \beta $ = beta of the equity (a measure of volatility compared to the market)
- $ R_m $ = expected return of the market
- $ R_m - R_f $ = market risk premium

Thus, the correct answer is **Cost of Equity**.

+1-0Tag to RevisitCAPM model is used to calculate which of the following ?Answer areaCost of Equity Cost of Term Loans Cost of DebtCost of Preference Share

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