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What is the cost of General Mills common stock equity? (Use the Capital Asset Pricing Model.)...

What is the cost of General Mills common stock equity? (Use the Capital Asset Pricing Model.)

Please use current annual 10K report for the company from SEC, it will be third result on google. I don't know what information you need exactly otherwise I would copy paste it and  i'm not allowed to post links I think.

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Answer #1

Cost of common stock equity is calculated in the following way using capital asset pricing model (CAPM).

= Risk free interest rate + Beta of common stock equity * (Market rate of interest - Risk free interest rate).

Note :- i). T-bill (Treasury bill) rate of interest, being risk-free always, represents to the risk-free interest rate.

ii). Difference between market rate of interest and risk free interest rate is also known as Risk premium / Market risk premium.

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