FMF9

Syllabus E2a. Cost of Equity 6 / 9

a) Estimate the cost of equity including:
i) application of the dividend growth model and discussion of its weaknesses.
ii) explanation and discussion of systematic and unsystematic risk.
iii) relationship between portfolio theory and the capital asset pricing model (CAPM)
iv) application of the CAPM, its assumptions, advantages and disadvantages
Cost of Equity