llustrate illiquidity risk and small cap premium
My investment bank told me that beta given by Bloomberg incorporates the illiquidity risk and small cap premium since Bloomberg does well-known Bloomberg adjustment formula. Is it true?
Expert
No. The well-known “Bloomberg adjustment formula” is an arbitrary adjustment within order to converge computed betas to 1 and contains multiplying the calculated beta with 0.67 and adding 0.33 to this. Adj. Beta = 0.67 x raw beta + 0.33. This is significant to point out that such adjustment is fully arbitrary.
What is the impact of auto portfolio into the quotation of the shares?
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You have joined Zurich Pvt. Ltd as a Finance manager. You are given the following information: Zurich Pvt Ltd. is a diversified manufacturing firm dealing with electrical appliances. In 2012, the firm reported an operating income of Rs. 857.60 million and faced a tax rate of 35% on income. The
A financial consultant is valuing the company I set as an objective (an entertainment centre) by discounting the cash flows until the end of the dealership at 7.26% (interest rate on 30-year-bonds = 5.1%; market premium = 5%, and Beta = 0.47%). 0.47 is a beta provided
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My Company paid an extremely higher price for the acquisition of other company; the price was recommended through the valuation of an investment bank. Now we have financial problems. So is there any way to make this bank legally responsible for such situation?
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