--%>
Assignment Help - homework help

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?

E

Expert

Verified

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.

   Related Questions in Corporate Finance

  • Q : What is Money Spreads Money Spreads :

    Money Spreads: Option trading strategies can be classified into various types like those pertaining to combination of one option with another option or set of options, other derivative contracts, stocks, etc. This paper focuses mainly on money spreads

    		•
  • Q : Data races-critical sections-processor

    A) Research the phenomena of data races. Give an illustration of how an unprotected data race can give mount to data inconsistency.How do OpenMP and Cilk resolve this problem? B) Present your own fully documented and tested program

    		•
  • Q : Explain modern quantitative

    Explain modern quantitative methodology for portfolio selection.

    		•
  • Q : Problem on required rate of return

    Tudor Online Publishing Corporation has tax rate of 35%, debt-to-equity ratio of 25%, and has (leveraged) beta 1.25. The riskless rate is 3% and the market return is 12%. Windsor Publishing Company is an all equity company and is in the same business. What is the requ

    		•
  • Q : Define capital goods Capital goods :

    Capital goods: Goods employed in producing other goods are termed as capital goods.

    		•
  • Q : Define Project Financing Project

    Project Financing: It is the procedure of determining how to go around obtaining the resources needed in managing the costs related with the launch and continuing operation of a project. Whereas this procedure sometimes comprises the re-allocation of

    		•
  • Q : Compute a company's cost of capital in

    How can we compute a company's cost of capital in emerging nations, particularly when there is no state bond that we could take as a reference?

    		•
  • Q : Vanilla Bonds-Corporate Bonds Define

    Define the term Vanilla Bonds regarding Corporate Bonds?

    		•
  • Q : Explain valuation method for

    We were assigned a valuation of a pharmaceutical laboratory’ shares. Which valuation method is further convenient?

    		•
  • Q : What is EBITDA What are Earnings before

    What are Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)?

    		•