CAPM Archives - Blog.jws

What is the cost of equity?

September 26, 2011

Two weeks ago, we learned about a company’s beta. Last week, we used the company’s beta when we learned about the capital asset pricing model. This week, we are going to take things a little further. In today’s post, we are going to be talking about the cost of equity. Investopedia states that “a firm’s …

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What is the capital asset pricing model?

September 19, 2011

Last week, we talked about what a company’s beta is. I figured that this week, we would learn about the Capital Asset Pricing Model (CAPM). According to Investopedia, the CAPM is “a model that describes the relationship between risk and expected return and that is used in the pricing of risky securities.” According to the third edition of …

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