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    Question

    What among the following is the correct formula to

    calculate the cost of Equity under CAPM model?
    A Risk free rate + Beta (Market rate – risk free rate) Correct Answer Incorrect Answer
    B Repo rate + Beta (Market rate – Repo rate) Correct Answer Incorrect Answer
    C Risk free rate + standard deviation (Market rate – risk free rate) Correct Answer Incorrect Answer
    D Repo rate + Standard deviation (Market rate – Repo rate) Correct Answer Incorrect Answer
    E Repo rate + systematic Risk (Market rate – Repo rate) Correct Answer Incorrect Answer

    Solution

    Cost of Equity = Risk free rate + Beta (Market rate – risk free rate)

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