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Author Question: Which of the following statements is correct? (Read 37 times)

Adc3669

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on: Aug 7, 2023
Which of the following statements is correct?

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An advantage shared by both the DCF and CAPM methods when they are used to estimate the cost of equity is that little or no judgment is required.


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If the calculated beta overestimates the firm’s true investment risk, i.e., if the historical beta exceeds the forward-looking beta that investors think exists, then the CAPM method based on the historical beta will produce an estimate of rsand thus a WACC that is too low.


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The specific risk premium used in the CAPM is the same as the risk premium used in the bond-yield-plus-risk-premium approach.


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Beta measures market risk, which is the most relevant risk measure for a publicly owned firm that seeks to maximize its intrinsic value. This is true even if not all of the firm’s shareholders are well diversified.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by Adc3669 on Aug 7, 2023

msgero

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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Adc3669

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

Jsherida

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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