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Level 15 · ◆◆◆ · ~12 min

The Cost of Equity & the SML

The Cost of Equity & the SML

"The CAPM's output has a name the firm cares about: the cost of equity — what shareholders demand, and one of the two ingredients of the WACC."

cost of equity = required returnestimating beta in practicealpha & market efficiencycost of equity feeds the WACC
🚀 You're jumping ahead. This builds on Beta & the CAPM — but play it now and you'll still earn full XP. If it feels steep, those make a gentler on-ramp.

A short lesson, then a quiz. ❤️×3 — a wrong answer costs a heart; finish with at least one left and the level is yours. Lose all three and you'll have to try again. Replay any time — XP and cleared levels are never lost.