Valutico

FEBRUARY 13, 2025

In the world of finance and investing, the concept of beta plays a vital role in assessing an investment’s risk and volatility. Whether you’re a seasoned investor or new to the market, understanding beta can empower you to make informed decisions. What is beta and how do you calculate beta?

Beta 52

Beta Covariance Risk-free Rate Specific Risk 52

Andrew Stolz

AUGUST 5, 2020

It helps an investor understand what to expect to earn in relation to the risk-free rate and the market return. CAPM assumes that the minimum a rational investor would earn is the risk-free rate by buying the risk-free asset. beta of a stock). E(r) = Rf + ??(Rm

Risk-free Rate 52

Risk-free Rate Beta Weighted Average Cost of Capital Risk Premium 52

Valutico

FEBRUARY 27, 2024

The discount rate effectively encapsulates the risk associated with an investment; riskier investments attract a higher discount rate. Different types of discount rates such as risk-free rate, cost of equity, or cost of debt, are used contextually in financial analysis.

Discounted Cash Flow 52

Discounted Cash Flow Risk Premium Risk-free Rate Beta 52

Andrew Stolz

MARCH 20, 2020

The formula implies the return an investor expects from a risk-free investment plus the return from the stock in relation to market volatility. The market risk premium is calculated from a market rate of return less a risk-free rate. Suitability and limitation. Conclusion.

Beta 52

Beta Capital Structure Risk-free Rate Weighted Average Cost of Capital 52

Brian DeChesare

AUGUST 31, 2022

Convertible Arbitrage Definition: Convertible arbitrage is a relative value strategy in which a hedge fund profits based on the pricing discrepancy between a company’s convertible bonds and its underlying stock; the fund exploits changes in volatility, credit quality, and interest rates to make money while minimizing overall market risk.

Banking 89

Banking Risk-free Rate Equity Start-ups 89

Musings on Markets

FEBRUARY 10, 2021

From a hurdle rate perspective, this implies that companies, where the marginal investors (who own a lot of stock and trade that stock) are diversified, should incorporate only macroeconomic or market risk into hurdle rates. More on that issue in a future data update post.)

Risk-free Rate 52

Risk-free Rate Risk Premium Start-ups Equity 52

Valutico

OCTOBER 20, 2022

Rf = Risk-free Rate. B = Beta. (Rm Rm – Rf) = Equity Market Risk Premium. DCF WACC—similar to the above except that it calculates a different WACC in each forecast period based on a changing capital structure (D/E) and thus a changing beta in each period. Risk free rate (can use 10y Treasury).

Discounted Cash Flow 52

Discounted Cash Flow Terminal Value Weighted Average Cost of Capital Net Present Value 52