--%>

Compute betas against local indexes

Does it make any sense to compute betas against local indexes while a company has a great part of its operations outside such local market? I have two illustrations: BBVA and Santander.

E

Expert

Verified

Both the betas computed against local indexes and also those calculated against international indexes are not very helpful, as we can notice from the following graphs that demonstrate the betas of Santander calculated along with everyday data throughout the past 5 years.

64_figure1.png

   Related Questions in Corporate Finance

  • Q : Attributes of debt securities What are

    What are the Attributes of debt securities?

  • Q : Explain modern quantitative

    Explain modern quantitative methodology for portfolio selection.

  • Q : How must we compute the beta and the

    How must we compute the beta and the risk premium?

  • Q : Problem about commercial and fiscal

    A court assigned to me (as an auditor and economist) a valuation of a market butcher’s. The butcher’s did not give any simple income statements or any valuable information that I could use in my valuation. This is a small business with just two workers, th

  • Q : Standard deviation of portfolios returns

    Assume that you have $50,000 which you want to invest in two companies, XYZ Books and ABC Audio. XYZ has a return of 10% and standard deviation 15%, while ABC has return of 15% with a standard deviation of 20%. The correlation coefficient between them is .5. Your port

  • Q : Calculated betas when they give

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

  • Q : Operational efficiency and

    Distinguish between Operational efficiency and informational efficiency?

  • Q : Expected return and standard deviation

    If an investor is considered to be risk-averse, what is his/her attitude towards expected return and standard deviation?

  • Q : Calculate a positive net income for a

    Is this possible for a company with a positive net income and that does not distribute dividends to get itself in suspension of payments?

  • Q : Long-Term Financing Needed Long-Term

    Long-Term Financing Needed : - At year-end 2012, total assets for Ambrose Inc. were $1.2 million and accounts payable were $375,000. Sales, which in 2012 were $2.5 million, are expected to increase by 25% in 2013. Total ass