hi Ronald, thanks for the videos i am learning so much from you. I have a case where the beta is not given but comparables firms' beta are, should i use the unleverged beta of each and get their average?
Hi Ronald! My question is the same as Doug's: Shouldn't it be the beta*market risk premium instead of beta * market return? We are calculating the required return here. Anyway, I only learned one formula, so am very easy to get confused. Thank you for your clarification!
Awesome video once again 👏👏👏.... The CAPM formula is : Rf + Beta(ungeared) X (Rm - Rf)
Answer 3% + 1.5(15-3) = 21%
hi Ronald, thanks for the videos i am learning so much from you.
I have a case where the beta is not given but comparables firms' beta are, should i use the unleverged beta of each and get their average?
Hi Ronald! My question is the same as Doug's: Shouldn't it be the beta*market risk premium instead of beta * market return? We are calculating the required return here. Anyway, I only learned one formula, so am very easy to get confused. Thank you for your clarification!
That's correct. My mistake.
FYI - Theres an error at the end of this video, Beta is plugged as the Rm in the cost of equity calculation
Your right. Thanks for letting me know.
If they said the MARKET PREMIUM was 15% then you can ignore subtracting the risk free rate
That's correct.
thank you