- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Valuation
- Learning Module 27. Private Company Valuation
- Subject 5. Income Approach Methods of Private Company Valuation
CFA Practice Question
The typical build-up model for estimating the cost of common equity capital may consist of all of the following components EXCEPT:
II. Beta.
III. A general equity risk premium.
IV. A size premium.
I. A risk-free rate.
II. Beta.
III. A general equity risk premium.
IV. A size premium.
Correct Answer: II
The build-up method excludes the application of beta to the equity risk premium.
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