You have risen through the ranks of a coffee comany, from the lowly green-apron barista to the coveted black apron, and all the way to CFO. A quick internet check shows that your company's beta is 0.6. The risk-free rate is 4.1% and you believe the market risk premium to be 5.2%. What is your best estimate of investors' expected return on your company's stock (its cost of equity capital)?

The cost of equity capital or expected rate of return is 7.22%

Explanation:

The expected rate of return or the required rate of return is the minimum rate of return required by the investors to invest in a stock or a portfolio of stock based on the systematic risk that a stock carries as represented by a stock's beta. The expected rate of return (r) of a stock can be calculated using the CAPM equation.

The CAPM equation is,

r = rRF + Beta * rpM

Where,

r = 0.041 + 0.6 * 0.052

r = 0.0722 or 7.22%

answer: kevoto

explanation: be healthy

answer; no individual buyer or seller has any significant impact on the market price;