[Verse 1] When investors seek their rightful prize They need to know what risk implies Three pillars hold the golden gate Risk-free returns that never break Plus beta's swing with market tides And premiums where danger hides [Chorus] CAPM equation's burning clear Cost equals risk-free plus beta here Times market premium minus safe Remember: R equals R-F plus beta-weight Times bracket M-R minus R-F rate Three pieces solve the equity fate [Verse 2] Treasury bonds at ten-year span Give risk-free rates across the land While beta measures stock's wild dance Against the market's broad expanse If beta's one, you move in sync Above means volatility's brink [Chorus] CAPM equation's burning clear Cost equals risk-free plus beta here Times market premium minus safe Remember: R equals R-F plus beta-weight Times bracket M-R minus R-F rate Three pieces solve the equity fate [Bridge] Market return exceeds the safe That spread's the premium investors crave Multiply beta by this gap Add risk-free rate to close the trap Conservative stocks with beta low Demand less return, their premiums slow [Verse 3] Aggressive stocks with beta high Command more compensation, that's no lie The model weighs systematic threat While firm-specific risks are met Through diversification's shield But market risk will never yield [Chorus] CAPM equation's burning clear Cost equals risk-free plus beta here Times market premium minus safe Remember: R equals R-F plus beta-weight Times bracket M-R minus R-F rate Three pieces solve the equity fate [Outro] Cost of equity crystal plain Risk-free plus market's risky gain Times beta's systematic score CAPM opens valuation's door
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