Risk
Precision formulas for β
One reason for using comparable companies’ data to derive the beta of a listed company is that it yields a more accurate beta. Is it worth the effort? […]
Archive
Category: Corporate Valuation Theory, Evidence and Practice – by M. E. Zmijewski; R. W. Holthause
Risk
4 Versions of Un-Levering Formulas
When valuing an organization, it’s easy to make mistakes if you approach the calculation of Cost of Equity and WACC superficially — because intrinsic value is highly sensitive […]
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Debt Rating
Among a CFO’s typical target KPIs is improving the company’s credit rating, as it directly impacts the organization’s value through its effect on the Cost of Debt (CoD) […]
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Cost of Debt & Debt β
💬 How to Estimate Cost of Debt for Private Companies? For “listed” companies, the Cost of Debt (CoD) is more or less accessible. But how do we estimate […]
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Expected Default and CoD
How to Calculate Expected Default Loss on a Bond? The cost of debt is often confused with the yield to maturity (YTM) of a bond/loan. The promised return […]
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True β
Adjusted β – It’s important to understand that statistical analysis provides an approximate rather than a “true” beta. Different commercial sources (as shown in the table) provide different […]
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β vs Financial Leverage:
An organization’s capital (#equity) is subject to systemic risk related to industry cyclicality, operational leverage, and financial leverage… The most significant impact on this uncertainty is seen in […]