How Long to Read Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies

How Long Does it Take to Read Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies?

It takes the average reader 1 hour and 8 minutes to read Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies by Sascha Heller

Assuming a reading speed of 250 words per minute. Learn more

Description

Inhaltsangabe:Introduction: Estimating the cost of equity capital has two major implications. First, it reflects the return to a company s stock which an equity investor expects to receive from his investment. He makes his decision upon whether he could earn a higher rate of return in an alternative investment of equivalent risk. Second, a company must earn the cost of capital (both debt and equity) through its undertaken projects. It is hence relevant for decisions on undertaking positive net present value projects which are of similar risk as the company s average business activities. It also substantially influences the pricing of an entire firm as far as the valuation is based on a discounted cash flow model. A lot of effort has been done in the past to achieve accurate models which precisely determine this cost. Building on the modern portfolio theory of Harry Markowitz, a widely used and commonly known model in this context is the Capital Asset Pricing Model (CAPM). Introduced by several researchers in the 1960s, it is still one of the most applied methods for practitioners. However, it suffers from several shortcomings, including statistical caveats, economic assumptions, the absence of market frictions and the behaviour of market participants. An upgrade to this model was provided by Stephen Ross which has resulted in the Arbitrage Pricing Theory (APT). It combines several risk factors in addition to one market proxy, as it is the case in the CAPM, and is less restrictive in its assumptions. But both CAPM and APT require observable market data, i.e. stock prices, of the analysed companies. These models thus only work for publicly listed firms. If research should be done on non-traded companies, however, an alternative methodology must be applied. In general, data from the balance sheet, the income statement and the cash flow statement are available for both listed and non-listed companies. While accounting data have widely been used in the past as well and have been assumed to provide valuable information in explaining stock returns, this line of research has dissipated over time. Only a few key figures, such as size and financial leverage, are still considered to be relevant. However, they can be used to indirectly estimate a firm s beta by assessing their explanatory power in a CAPM or APT framework. This methodology is particularly beneficial for firms which are not listed because there cannot be observed any stock price movements. [...]

How long is Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies?

Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies by Sascha Heller is 67 pages long, and a total of 17,219 words.

This makes it 23% the length of the average book. It also has 21% more words than the average book.

How Long Does it Take to Read Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies Aloud?

The average oral reading speed is 183 words per minute. This means it takes 1 hour and 34 minutes to read Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies aloud.

What Reading Level is Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies?

Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies is suitable for students ages 8 and up.

Note that there may be other factors that effect this rating besides length that are not factored in on this page. This may include things like complex language or sensitive topics not suitable for students of certain ages.

When deciding what to show young students always use your best judgement and consult a professional.

Where Can I Buy Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies?

Estimating beta and Cost of Equity Capital for Non-traded Transportation Companies by Sascha Heller is sold by several retailers and bookshops. However, Read Time works with Amazon to provide an easier way to purchase books.

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