Question

is cost of equity be negative?? when i try to find market premuim durin 2002 to 2006, i got market return as -31% and risk free yield as 7%. Hence mt cost of equity is 7%+0.97*(-31%-7%)=-30% is it right way of calculation? Please clarify

Answer 1

please help. Medal is awarded for the answer

Answer 2

In accounting and finance, equity is the residual value or interest of the most junior class of investors in assets, after all liabilities are paid; if liability exceeds assets, negative equity exists.

Answer 3

So if your calculations are correct, -30% is certainly an answer. :)