What is coe? and how it is calculated?

Cost of equity is the sum total of  return expected by the shareholders along with the risk free rate. It is calculated by using the following formula:

 Ce=  Rf+ Bs(Rm-Rf)

where Ce= Cost of equity

             Rf= Risk free rate of return ie. the interest rate of government bonds prevailing in the country

             Bs= Beta of the particular stock ie.The volatility of the stock to stock market indices movements

             Rm= Return of the stock market indices (Avg for atleast3 years)

This can also be calculated by Capetial Asset Pricing Model and by Weighted Average Cost of Capital methods.

Cost of equity is the significant factor which the investors look at before and after investing