The cost of equity capital is equal to risk free rate plus

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The cost of equity capital is equal to the risk free rate plus an equity risk premium. In the US, over time that equity risk premium has averaged about 8.5% so that at a 3% Treasury rate, the cost of equity has averaged about 11.5%. The equity risk premium may vary from country to country. What are some factors that may account for such differences?

Reference no: EM131066372

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