Beta and Risk assesment - StudentOfFortune.com

Question

Asked by:

Help
Rating : No Rating
Questions Asked: 61
Tutorials Posted: 0

$1.75 Beta and Risk assesment

From Business: General-Business , Economics: General-Economics
Closed, but you can still post tutorials
Due on Jan. 02, 2008
Asked on Dec 20, 2007 at 3:07:01PM

Q:
To estimate the beta of an individual asset for a highly diviersified, publicly traded firm, analysts will most likely employ:

a. the pure play method
b. the accounting beta method
c. risk-adjusted discount rates
d. an imputed measure of corporate risk

My Notes: I have ruled out "A" and "B" but I'm not sure what an imputed measure of corporate risk means.

Attachments:

Available Tutorials to this Question

Posted by:

harry_uk
Rating (94): A
Questions Asked: 0
Tutorials Posted: 211, earned $1,257.59

$5.00 Explained with clarity

This tutorial was purchased 1 time and rated A+ by students like you.
Posted on Dec 21, 2007 at 03:00:33PM

A:
Preview: ... k, since they failed the research. so the risk premium for Company B will be higher, and hence if you compute the Beta it won't be same as Company A. The answer is hence d. Why we don't just take risk-adjusted discount rates. Risk adjusted discount rate is used to find NPV or in other words to choose or not to choose a project. We are not talking abt choosing a stock, we are talking abt its beta. Hence discount rate becomes less relevant. M ...

The full tutorial is about 390 words long .