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How does capital asset pricing model help explain changing costs of capital?

Answer:

It helps to explain the costs of capital by creating a model which intuitively understands the cost of capital as a function of a small number of well-understood economic variables, such as interest rate, demand, future discount, and capital stock.

First answer by Emil123. Last edit by M200220232. Contributor trust: 47 [recommend contributor ]. Question popularity: 4 [recommend question].

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