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    Cost of equity for American Express

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    First, the cost of equity is often used in valuing the stocks of a company. Second, CAPM is stated as follows:
    Rj - RF = ?j [RM - RF]
    or
    Rj = RF + ?j [RM - RF]
    Rj = expected required rate of return of an asset
    RF =risk free rate
    ?j = systematic risk of the asset vis-à-vis the market
    RM = expected required rate of return of the market portfolio

    Third, CAPM needs several inputs and they are as follows:
    1. Risk free rate = ??
    This risk free rate is the current price yield of a 12-month United States Treasury bill (Bloomberg, 2011).
    2. Market risk premium = ??
    3. Beta ??
    .
    the cost of equity for Visa is computed as follows: ??
    the cost of equity for Discover Financial Services; ??
    the cost of equity for American Express: ??

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    https://brainmass.com/business/capital-asset-pricing-model/cost-of-equity-for-american-express-399313

    Solution Preview

    First, the cost of equity is often used in valuing the stocks of a company. Second, CAPM is stated as follows:
    Rj - RF = ?j [RM - RF]
    or
    Rj = RF + ?j [RM - RF]
    Rj = expected required rate of return of an asset
    RF =risk free rate
    ?j = systematic risk of the asset vis-Ã -vis the market
    RM = expected required rate of return of the market portfolio

    Third, CAPM needs several inputs ...

    Solution Summary

    Solution helps in calculating cost of equity for American Express

    $2.19

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