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Estimating the cost of equity
Estimating the cost of equity

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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.