The cost of equity is defined by Investopedia as, “the compensation the market demands in exchange for owning the asset and bearing the risk of ownership.” Or to put it another way, the cost of equity is the return of a firm theoretically pays to its equity investors to compensate them for the risk of investing in the common equity. What Should The Cost Of Equity Be To Value Investors? Calculating Cost of Equity for Value Investors Cost of Equity and Asset Pricing The cost of equity is a fundamental concept of the world of finance. Investors need to…
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