The CAPM or the Capital Asset Pricing Model is a model that helps in determining a theoretically correct required rate of
The model considers the sensitivity of assets to non-diversifiable risk. It is represented by beta (ß) or the expected return of the market and the expected return of a theoretical risk-free asset.
Constant Dividend Growth Model:
The constant dividend growth model considers the value of a company’s equity and its market
To determine:
The major tradeoffs in using the CAPM versus the CDGM to estimate the cost of equity.
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