The rhaegel corporation's common stock has a beta of 1. if the risk-free rate is 4.5 percent and the expected return on the mark

Question

1 year ago

14

et is 15 percent, what is the company's cost of equity capital?

1 answer:

Ksju [112] · Answer 1 · 2023-10-02T10:20:14+03:00

Cost of equity = Risk-free rate + (Beta * (Market return - Risk-free rate))

Cost of equity = 4.5% + (1 * (15% - 4.5%))

Cost of equity = 4.5% + (1 * 10.5%)

Cost of equity = 4.5% + 10.5%

Cost of equity = 15.00%

<h3>What is stock?</h3>

Stock in the financial industry refers to the shares into which ownership of a corporation or company is divided.
A single share of stock represents a fractional ownership interest in the company based on the total number of shares.
The shareholder (stockholder) will then typically be entitled to that portion of the company's earnings, proceeds from the sale of company assets, or voting rights, with these rights frequently being distributed in proportion to the amount of money each stockholder has invested.

<h3>Why would one use stock?</h3>

Stock is typically used as a neutral foundation for recipes.
It's meant to increase mouthfeel but not flavor intensity.
Remove all meat from the bones before using them to make stock.
You shouldn't add any additional flavors or aromatic items if you want to make a neutral stock.

Learn more about stock here:

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