Market premium is 7.5 percent, market rate of returns is 15.6, beta is 1.33. What is the value of equity share?

Correct option is D

​To determine the expected return on equity, we use the Capital Asset Pricing Model (CAPM) formula:

Information Booster:

• The CAPM is widely used in finance to determine the expected return on an investment based on its systematic risk.
• Beta ($\beta$) represents the stock's volatility relative to the market. A beta of 1.33 indicates that the stock is 33% more volatile than the market.
• The market risk premium represents the additional return investors expect over the risk-free rate.
• Application in valuation: CAPM helps in pricing risky securities, evaluating project feasibility, and determining the cost of equity in corporate finance.