📈 CFA Exam Prep

The cost of equity using CAPM is:

A Risk-free rate only
B Rf + β(Rm − Rf), where β measures systematic risk
C Dividend yield only
D WACC

✓ Correct Answer: Option B

CAPM: Re = Rf + β(Rm − Rf). Risk-free rate plus equity risk premium scaled by the stocks beta.

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