This free
course, Estimating
the Cost of Equity, looks at how to estimate the cost of
equity using the dividend valuation model (DVM) and the capital
asset pricing model (CAPM), and how to evaluate the use of the
DVM and the CAPM from a financial and
strategic perspective. It then explores the implications
regarding the selection of the inputs to the DVM and CAPM and
assesses the implications of using the beta measure in the
CAPM.
Course learning outcomes
After studying this course, you should be able to:
- select and justify a suitable risk-free rate and equity risk premium for use in determining the expected return for a share
- evaluate the different approaches to identifying a suitable equity risk premium
- use the dividend valuation model to calculate the return on a share and the return on a market
- use the return on a market to arrive at an implied equity risk premium.
