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The Real Cost of Capital
book

The Real Cost of Capital

by Tim Ogier
December 2012
Intermediate to advanced
250 pages
7h 30m
English
FT Publishing International
Content preview from The Real Cost of Capital

1

RISK AND RETURN REVISITED

Introduction

Towards a definition of the cost of capital

Understanding the principles that determine the cost of capital

Introducing risk

The relationship between risk and return

Arbitrage and rationality

Behavioral aspects of the cost of capital

Key points from the chapter

Notes

This chapter deals with the concepts that underpin the application of cost of capital.

Companies obtain capital from both shareholders (equity) and lenders (debt). Both types of capital come at a cost. This is because investors require a return to reflect the opportunity cost associated with committing their money over a period of time. For debt this cost is the rate of interest that the lender charges – this varies with the amount of ...

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Publisher Resources

ISBN: 9780273748250