Steady Company's stock has a beta of . If the risk-free rate is and the market risk premium is , what is an estimate of Steady Company's cost of equity?

The question is incomplete as it misses the figures. The following is the complete question.

Steady Company's stock has a beta of 0.21. If the risk-free rate is 6.2% and the market risk premium is 6.9%, what is an estimate of Steady Company's cost of equity?

The cost of equity is 0.07649 or 7.649%

Explanation:

The required rate of return or cost of equity capital is the rate required by the investors to invest in a stock based on the systematic risk of the stock as measure by the beta. The required rate of return or cost of equity can be calculated using the CAPM equation. The CAPM equation is,

r = rRF + Beta * rpM

Where,

r = 0.062 + 0.21 * 0.069

r = 0.07649 or 7.649%

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