Question

The CAPM is the only method to compute the cost of equity.

a) True
b) False

Answer 1

The CAPM is not the only method to compute the cost of equity. Other methods exist, such as the Dividend Discount Model and the Bond-Yield Plus Risk Premium Model.

Step-by-step explanation:

The CAPM is the only method to compute the cost of equity.

False

The Capital Asset Pricing Model (CAPM) is one method used to estimate the cost of equity, but it is not the only method. Other methods exist, such as the Dividend Discount Model (DDM) and the Bond-Yield Plus Risk Premium Model. Each method has its own assumptions and limitations, so it's important to consider multiple approaches when estimating the cost of equity for a company.