Which of the following represent common components of the global capital asset pricing model when applied to valuing firms in emerging countries?
A) Risk free rate of return
B) Specific country's risk premium
C) Firm size risk premium
D) Emerging country firm's global beta
E) All of the above

Question

Quizplus · Accepted Answer

All of the listed components are common in the global capital asset pricing model when applied to valuing firms in emerging countries. The risk free rate of return is important in determining the expected return on an investment, the specific country's risk premium reflects the additional risk of investing in that country's market, and the firm size risk premium takes into account the potential risks associated with investing in a smaller or less established company. The emerging country firm's global beta is also important in calculating the firm's expected return and is specific to the country's economic conditions.

Which of the Following Represent Common Components of the Global