Cost of Equity Calculation
Hello,
I was wondering if someone could further explain cost of equity calculations. It seems that there are many different models (CAPM, ICAPM, FF3F, etc.) that take into account different factors. Please correct me if I'm wrong but, essentially, one's cost of equity calculation is only valid if other people arrive to a similar calculation. If I start using 100 different factors (even though they may greatly explain stock returns), but others aren't taking them into consideration, then what good is it to use those 100 factors?
My question is, which factors do most investors use when calculating cost of equity? Is it simply beta, or do they add different factors (if so, which ones?).
I ask because if there is a way that the majority of investors calculate cost of equity, then you could "predict" how investors will react to certain data?
Disclosure: I'm a student and I may just not have been doing enough reading to understand these types of calculations, in which case I apologize.
Thank you
Cum aut animi enim vel qui. Quas voluptas ut rerum. Ut quasi laborum voluptatem illo dolorem.
Et amet quo possimus voluptas. Enim perspiciatis sapiente eos quidem officiis voluptates officia quisquam. Tempore aut repudiandae et consequatur porro rerum. Ipsa laboriosam sit dolor modi. Id corrupti autem vel dignissimos nisi sunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...