Shall we use the arithmetic mean or the geometric one
The market risk premium is the difference between the historical return on the stock market and the return on bonds. But how many years does “historical” imply? Shall we use the arithmetic mean or the geometric one?
Expert
The risk premium that is relevant for the calculation of the required return to shares is one explained in A78 and this does not have much to do either along with the historic one or with the implicit or expected ones.
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?
If the model could not even find bond prices right, how could this hope to accurately value bond options?
Explain how companies with substandard financial history can draw the attention of investors. Are investors irrational or naive?
Our company (A) is going to buy the other company (B). We need to value the shares of B and, thus, we will use three options of the structure Debt/Shareholders’ Equity in order to obtain the WACC as: 1) Present structure of A
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For XYZ Corporation debt-to-equity ratio, marginal tax rate, and dividend payout ratio are all of 40%. The cost of debt is 10%. Cambria contains 1 million shares of common stock, and $25 million in long-term bonds. Its dividend is $1 per share. Determine the EBIT and
I have a doubt about the Enron case. How could this prestigious investment bank advice investing while the quotations of the shares were falling?
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Explain the working of breakthrough in low-discrepancy sequences used for option valuation.
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