--%>

Calculated betas when they give different information

Calculated betas give different information if they are acquired by using weekly, monthly or daily data.

E

Expert

Verified

Since betas calculated with historical data as follows:

1) Change many from one day to other;

2) Depend upon that stock market index was considers as a reference;

3) Depend many on which historical period (as 5 years, 3 years…) is used in the computation;

4) Depend on that returns (as monthly, yearly…) are used in the computations;

5) We do not know whether they are higher or lower than the betas of other companies and

6) They have almost no concern to the posterior return of the shares. The correlation of the regressions also which are used in the computation of betas is almost always very low.

   Related Questions in Corporate Finance

  • Q : Financing EBIT problem Rusk Inc needs

    Rusk Inc needs $50 million in new capital that it might obtain by selling bonds at par with coupon of 12% or by selling stock at $40 (net) per share. The current capital structure of Rusk consists of $300 million (face value) of 10% coupon bonds selling at 90 and 10 m

  • Q : Explain Value Chain Value Chain : The

    Value Chain: The value chain is a theory from business management that was first described and popularized Michel Porter in his 1985 best seller, Competitive Advantage: Creating and Sustaining Superior Performance.

  • Q : How must we compute the beta and the

    How must we compute the beta and the risk premium?

  • Q : Porters Secondary activities Porter's

    Porter's Secondary activities: 1. Procurement: • Identification process of raw material.• Identification process of identifying probable suppliers.• Process of purchasing and calling quotes. 2. Human Resource management:

  • Q : Is the given affirmation of an

    Is the given affirmation of an accountancy expert true? “There valuation criterion that reflects the value of the shares of a company in the most accurate way is based on the amount of the equity of shareholder of its balance sheet. Stating that the value of sha

  • Q : How can auditor spot acts of creative

    How can auditor spot acts of creative accounting? Means let an illustration, the excess of provisions or the non-elimination of intra group transactions along with value added.

  • Q : Explain undervaluation of share on the

    Suppose we calculate g as ROE (1–p)/(1–ROE (1–p)) and the Ke by the CAPM. We replace both values into the formula PER = (ROE (1+g) – g)/ROE (Ke-g) but there PER we obtain is fully different from the one we get by dividing the quotation of the s

  • Q : What are flow variables Flow variables

    Flow variables: Any variable, whose magnitude is evaluated over a time period, is termed as glow variable.

  • Q : Bond Price Information What is Bond

    What is Bond Price Information: Answer: Corporate bond market is not considered to be much transparent as it trades predominantly over the counter and investors do n

  • Q : What is a 3 x 1 Split What is a 3 x 1

    What is a 3 x 1 Split?