CFACorporate Finance

Cost of equity is typically estimated using:

AYTM of bonds
BCAPM (Capital Asset Pricing Model): Rf + β(Rm − Rf)CORRECT
CCost of debt × tax rate
DDividend yield only
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Why the answer is B, and why the others tempt you.
CAPM is the most common method; Ri = Rf + β(Rm − Rf).
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