barcode in vb.net source code Estimating the Cost of Capital in Software

Encoder Data Matrix 2d barcode in Software Estimating the Cost of Capital

Estimating the Cost of Capital
Reading Data Matrix In None
Using Barcode Control SDK for Software Control to generate, create, read, scan barcode image in Software applications.
Draw Data Matrix In None
Using Barcode creation for Software Control to generate, create DataMatrix image in Software applications.
annual return basis, has decreased from 5.5 percent for the period 1926 1990, to 3.25 percent for the period 1962 1990, to 0.19 percent for the period 1981 1990. In his text, despite the decrease in observed Rerp, he uses the longer-term 75-year average, 5.5 percent equity risk premium in his cost of capital calculations and in his valuation examples. Investors also have noticed this decrease in the historic equity risk premium, and it appears to us that their expectations of this risk premium have lessened. During the late 1990s the risk premium certainly dropped, perhaps even into negative numbers, with the promise of a New Economic Paradigm. (What a joke!) Wall Street analysts, business journalists, and telecosm gurus promoted the notion that the new era of the Internet and high-tech companies would create unlimited growth. Investors were encouraged to bid up the price of many stocks to unreasonably high market equity levels that never could have been supported by the operating profits generated by those companies. We believe that a reasonable equity risk premium for the stock market of late-2002 is approximately 3 percent,2 which is what we use in our valuations. Since the terrorist attacks of 9/11 and the corporate governance and accounting scandals of Enron, WorldCom, Tyco, Adelphia, and others, volatility has increased in both the equity and debt markets through December 2002. Concerns remain that the price of risk may be increasing. The Federal Reserve has been generous in maintaining liquidity in the financial markets. However, the stock market must continue to deflate from the overvaluation of the high-tech bubble. Coupled with ongoing fears of turban capped terrorists plotting mass destruction in caves, and Brooks Brothers-clad CEOs and CFOs plotting the next accounting scam to cash in stock options, the outlook is not a promising mix for stock prices. However, in the past when things look bleakest, it often is a good time to buy stocks.
Recognizing Data Matrix ECC200 In None
Using Barcode scanner for Software Control to read, scan read, scan image in Software applications.
Create Data Matrix In Visual C#.NET
Using Barcode printer for .NET Control to generate, create ECC200 image in VS .NET applications.
Expected Return Relating to an Individual Stock
Encode ECC200 In VS .NET
Using Barcode printer for ASP.NET Control to generate, create ECC200 image in ASP.NET applications.
Data Matrix ECC200 Drawer In .NET Framework
Using Barcode printer for Visual Studio .NET Control to generate, create DataMatrix image in VS .NET applications.
The third measure of return versus risk beta is related to a specific stock. What is the risk of the market sector of the firm s principal business (its operating or business risk) How risky is the financial structure or leverage of the firm (its financial risk) Beta measures the risk of the company relative to the risk of the stock market in general. Greater risk (operating or business), as measured by a larger variabil-
Encode Data Matrix 2d Barcode In VB.NET
Using Barcode drawer for .NET framework Control to generate, create ECC200 image in .NET applications.
Making Barcode In None
Using Barcode drawer for Software Control to generate, create barcode image in Software applications.
STREETSMART GUIDE TO VALUING A STOCK
GTIN - 13 Creator In None
Using Barcode encoder for Software Control to generate, create EAN-13 image in Software applications.
Barcode Creation In None
Using Barcode creation for Software Control to generate, create barcode image in Software applications.
ity of returns, increases a company s beta. Likewise, with greater leverage (higher debt/value ratio) and increasing financial risk, the company s stock should also have a larger beta. With a larger beta, an investor should expect a greater return. The beta of a firm of average risk in the stock market is 1.0. The beta of a firm with below-average operating risk, such as a firm operating in a regulated industry, is less than 1.0. For example, according to Value Line, the beta of Consolidated Edison is 0.4725. The betas of firms with above-average operating risk, such as Microsoft or Cisco, which operate in quickly changing industries such as software and computers, are greater than 1.00. Microsoft s beta, according to Yahoo Finance through its Market Guide alliance, is 1.72. According to Yahoo Finance, Cisco s beta is 1.93. Clearly, megabytes are more volatile than megawatts.
UPC Code Drawer In None
Using Barcode generator for Software Control to generate, create UPC Symbol image in Software applications.
Code39 Drawer In None
Using Barcode generator for Software Control to generate, create Code-39 image in Software applications.
Expected Return and the Capital Asset Pricing Model
Print ISBN In None
Using Barcode maker for Software Control to generate, create International Standard Book Number image in Software applications.
Scanning Universal Product Code Version A In Java
Using Barcode reader for Java Control to read, scan read, scan image in Java applications.
As you recall from 2, the financial model that uses beta as its sole measure of risk (a single-factor model) is the Capital Asset Pricing Model (CAPM). Many market analysts use CAPM to value a stock. The relationship between risk and return that is determined by the model and is incorporated into our FCFF analysis and ValuePro 2002 software is: Expected Return of a Stock (Rs) [Rf (beta * Rerp)]
Barcode Recognizer In Java
Using Barcode Control SDK for Eclipse BIRT Control to generate, create, read, scan barcode image in Eclipse BIRT applications.
Painting EAN / UCC - 14 In None
Using Barcode drawer for Font Control to generate, create UCC-128 image in Font applications.
In English, this equation translates to: The expected return on a stock is equal to the risk-free rate, plus the specific stock s beta, times the equity risk premium (e.g., 3.0 percent). For ConEd and Cisco, in numbers it looks like this: Expected Return on ConEd Stock Expected Return on Cisco Stock [4.25% [4.25% (0.4725 * 3%)] (1.93 * 3%)] 5.67% 10.04%
Barcode Reader In C#.NET
Using Barcode reader for Visual Studio .NET Control to read, scan read, scan image in VS .NET applications.
Code 128 Code Set A Generator In None
Using Barcode drawer for Microsoft Word Control to generate, create USS Code 128 image in Word applications.
The CAPM equations result in a linear relationship between the expected return on a stock and its specific risk measure, beta. A graph of this risk/return relationship with a risk-free rate of 4 percent, a stock market risk premium of 3 percent, and the expected return for a stock with a beta of 1.4 is shown in Exhibit 6-4:
Barcode Creator In None
Using Barcode printer for Online Control to generate, create barcode image in Online applications.
Recognize Code 128C In C#
Using Barcode scanner for Visual Studio .NET Control to read, scan read, scan image in .NET framework applications.
Copyright © OnBarcode.com . All rights reserved.