To compute the required rate of return for equity in a company using the CAPM, it is necessary to know all of the following except:
(A) the risk-free rate.
(B) .the beta for the firm.
(C) the earnings for the next time period.
(D) the market return expected for the time period.
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Answer:
(C) the earnings for the next time period
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Explanation:
Among the various options given in question statement the correct option is the third one.
CAPM stands for capital asset pricing model. In this model, we evaluate the price of the asset. In this model, risk free rate of asset is considered, the beta of the firm and the overall expectations from the market in the given time frame and it does not depend on the earnings of coming time frame
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