Monday, March 2, 2015

If a risk-free rate increases what impact would it have on the cost of equity?

If a risk-free rate increases what impact would it have on the cost of equity?
It would increase the cost of equity: re=rf + b*(RP)
re is the cost of equity
rf is the risk free rate
b is the beta of the stock
RP is the risk premium of the stock

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