What is a required rate of return on equity generally referred to as?

The required rate of return on equity is generally referred to as the cost of equity. This concept represents the return that investors expect to earn from an investment in a company's equity. It serves as a critical indicator for assessing whether an investment is worthwhile, as it reflects the opportunity cost of investing funds elsewhere with similar risk.

In finance, the cost of equity can be estimated through various models, such as the Capital Asset Pricing Model (CAPM), which accounts for the risk associated with owning the stock versus a risk-free investment. This return is essential for a company in making decisions about financing and for investors when evaluating their investment options.

The other terms listed, such as the cost of debt, equity premium, and equity valuation, refer to different concepts in finance. The cost of debt pertains to the effective rate that a company pays on its borrowed funds, while equity premium refers to the excess return that investing in the stock market provides over a risk-free rate. Equity valuation is the process of determining the worth of an equity security, but it does not directly define the idea of the required return. Therefore, the cost of equity distinctly captures the essence of the required rate of return on equity.