Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
24 andTreasurybondrates,butthisanalysiscouldhavebeen done entirely in the local currency. Theimpliedequitypremiumschangeovertime ...
their risk and return models. In fact, the average implied equityriskpremiumhasbeenbetweenabout 4 percentover the past 40 years. ...
pricesforindividualassets,thesecondistoestimatethebetas fromfundamentals,andthethirdistouseaccountingdata. We describe all three ...
Therearethreedecisionstheanalystmustmakeinsettingup theregressionjustdescribed.Thefirstconcernsthelengthof the estimation period ...
relevant measure of risk mayemerge by using the global index. Whiletheprocessofestimationofriskparametersisdifferent for the APM ...
TheregressionofDisneyreturnsagainsttheS&P 500 returns is summarized here: Basedonthisregression,thebetaforDisneyis1.01butthe ...
theyfeelarenecessarychangestomakethembetterestimates forthefuture.Ingeneral,betasreportedbydifferentservices for the samefirm ca ...
Type of Business Sincebetasmeasuretheriskofafirmrelativetothemarket, the more sensitive a business is to overall economic condit ...
operating leverage (since they enjoy fewer economies of scale). Degree of Financial Leverage Other things remaining equal, an in ...
higher betas. The tax factor in the equation captures the benefit created by the tax deductibility of interest payments. Theunle ...
asset betas, with the weights based on market value. Consequently,thebetaforafirmisaweightedaverageofthe betas of all the differ ...
regression betas, we would suggest the latter approach. Averaging approach. The average beta across the comparablefirmscanbeeit ...
Estimate thelevered beta for the firm(and each of its businesses) using the unlevered beta from step 3 and the leverage from st ...
The bottom-up beta can reflect recent and even forthcomingchangestoafirm’sbusinessmixand financial leverage,sincewecanchangethe ...
consideredpartof thetheme parks,sincetheyderive their revenue almost exclusively from visitors to these parks. Consumer product ...
To obtain the beta for Disney, we have to estimate each business’s weightin relationto Disneyasa company.The valueforeachofthedi ...
Thiscontrastswiththebetaof1.01thatweobtainedfromthe regression,andis,inourview,amuchtruerreflectionofthe risk in Disney. Account ...
investinginequityatanyfirm.IntheCAPM,thisexpected return can be written as: where the risk-freerate would be therate on a long-t ...
market—about 3 to 3.5 percent when we look at the 1926–2004period.Thispracticecanbedangerousforthree reasons.Thefirst isthat the ...
help explain thehigh returns thatsome venture capitalists demand on their equity investments in fledgling businesses. 3.Adjustth ...
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