Moeller. "Calculating the Beta Coefficient and Required Rate of Return for Coca-Cola," Journal of Business Case Studies, Volume 6, Number 6, November/December 2010, pp. 77-83Gardner, J. C., McGowan Jr., C. B., & Moeller, S. E. (2010). Calculating The Beta Coefficient And Required...
The “Mortgage Payment” plot shows the price indices adjusted to account for changing mortgage rates. This plot incorporates both the Case-Shiller data and the mortgage rate to show how the payments for a 30 year fixed rate mortgage have varied for a “constant-quality” home. Continue reading...
the dividend valuation model.The capital asset pricing model uses the beta factor of a company to measure its risk; a betafactor reflects the volatility of the company’s share price against the stock market. Since Etondoes not have a share price (it is not listed) it cannot have a beta...
In this calculation we've used 7.9%, which is based on a levered beta of 1.225. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, ...
Each“component,”i.e.,debt,preferredstockandequityhasacost.Ifthecostofdebtwas10%andthecostofpreferredstockwas12%andthecostofequitywas20%andIFthecompanyusedequalamountsofeachtypeoffinancing,thecompany’scostofcapitalwouldbesimply:10+12+20=42and42/3=14%wouldbetheCCHowever,companiesdonotuseequalamount...
Calculate the cost of equity (Re). It is the return shareholders require based on the company’s equity riskiness. One commonly used method to calculate Re is the Capital Asset Pricing Model (CAPM), which considers the risk-free rate, the market risk premium, and the company’s beta. ...
Fractal dimensiondefines how an object or a process fills the space and how its structure changes on various scales. When applying this definition to financial (or in our case — Forex) markets, we can state that the fractal dimension defines the degree of "irregularity" (variability) of a t...
To calculate the required rate of return, you must look at factors such as the return of the market as a whole, the rate you could get if you took on no risk (risk-free rate of return), and the volatility of a stock (or overall cost of funding a project). The required rate of...
The article focuses on the alpha and beta values of a security. These values measure a security's performance, adjusted to risk and compared to overall market behavior. They give investors a quick indication of how risky a stock or fund is. Alpha is the return a security or a portfolio ...
Our model is based on the concept that the target or proposed debt level for the firm being evaluated can be replicated via a stock portfolio. In an efficient market where arbitrage can occur, the beta for the firm at the target debt level may be derived from the beta of the replicated ...