Research Discussion Paper – RDP 9107 The Cost of Equity Capital in Australia: What can we Learn from International Equity Returns?

Contents

• Introduction
• Data – Stockmarket Returns
• The Cost of Equity – Theory
• Measures of the Cost of Equity
• Estimates of the IAPM
• Can Stockmarket Risk be Explained by Real Earnings Risk in Australia?
• Discussion
• Conclusion
• References

I am grateful to Carliss Baldwin, Nigel Dews, and Chris Ryan for comments on previous drafts of this work. The views expressed here are my own, and do not necessarily represent those of the Reserve Bank of Australia.