I do the regression beta for comparable firms, then I average them out, then I should unlever the beta by looking at the average D/E ratio for those firms. But the beta is calculated over time, the D/E is taken at a point in time, maybe one year before it was different. How to deal with this? Thanks!
Post class test: - question 4: Prof., shouldn't it say "If the LEVERED beta for the sector is 0.80, what would you expect the LEVERED beta for your company to be?"
Can someone clarify this please - I computed beta in which the bottom up (Levered) beta using comparable firm avgs was lower than regression beta (levered) of that company. What could have led to the difference. Thanks .
The regression beta for the single company has a high t-stat, giving you an inflated market risk (higher Beta). The bottom-up beta is the more trustworthy answer if you abide by the law of large numbers as mentioned in the video.
It's just the relationship between the two based on historical data. A way to get a quick answer if you don't wanna do the full-fledge Present Value to find the ERP, don't take it as a rule.
Who'd thought lack of battery will pause this great lesson of valuation?
For the debt-equity ratio, should we use the market value or the book value?
Thank you and greetings from Brazil
Only problem, every video ending abruptly. Otherwise, the content a the great source of free knowledge
Great session Professor!
It would be great if we can have a session on Size Premium.
Prof to calculate beta for Indian steel Co.. For this is it OK to run regression of global company price to sensex..?
I do the regression beta for comparable firms, then I average them out, then I should unlever the beta by looking at the average D/E ratio for those firms. But the beta is calculated over time, the D/E is taken at a point in time, maybe one year before it was different. How to deal with this? Thanks!
Post class test: - question 4: Prof., shouldn't it say "If the LEVERED beta for the sector is 0.80, what would you expect the LEVERED beta for your company to be?"
professor, can you please explain how did you get the unlevered beta of Metals and Mining as 0.86.I am confused.
He did a session on how to find bottom-up beta here:
ruclips.net/video/G75Z1wb3o9Q/видео.html
Can someone clarify this please - I computed beta in which the bottom up (Levered) beta using comparable firm avgs was lower than regression beta (levered) of that company. What could have led to the difference. Thanks .
The regression beta for the single company has a high t-stat, giving you an inflated market risk (higher Beta). The bottom-up beta is the more trustworthy answer if you abide by the law of large numbers as mentioned in the video.
why you multiply default spread by 2 to get the equity risk premium what's the logic behind it
It's just the relationship between the two based on historical data. A way to get a quick answer if you don't wanna do the full-fledge Present Value to find the ERP, don't take it as a rule.
If I cllick on "Start of the class test" I get the slides, again.