If I wanted to measure the systematic risk of an asset, I would calculate its ..

Question

If I wanted to measure the systematic risk of an asset, I would calculate its .......... As opposed to this, if I wanted to measure the absolute risk (total risk) of an asset I would calculate its

Of the total risk of a portfolio, the nondiversifiable part is known as

If the expected dividend on a stock in the coming year is $2.50 (d1), and its constant growth rate is 5%, what would be the cost of internal equity for this firm if the current market price of its stock is $25?  You can assume that the company uses the constant growth rate model.

Explanation / Answer

a) beta

b)systematic risk

c)25 = 2.50/(r-0.05)

r = 15%

cost of internal equity = 15%

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