Summary: Ppt Slides - Flashcards
- This + 400k other summaries
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding
Read the summary and the most important questions on PPT slides - flashcards
-
1 Estimating the Cost of Capital
-
1.1 The Equity Cost of Capital
This is a preview. There are 1 more flashcards available for chapter 1.1
Show more cards here -
What is the CAPM formula and what does it determine?
TheCAPM determines the expectedreturn (Security MarketLine ) as follows:
rf= risk free rate (government; trusted that they will always pay back hence their interest is taken as base)
Beta= companies individual risk according to the market movement
If the calculation in bracket is negative —> No reason to invest -
What does the beta represent?
Beta is the expected percent change in the excess return of the security for a 1% change in the excess return of the market portfolio. -
What is the difference between volatility and beta i.e. What risks do they represent?
Volatility =Total riskBeta =Market/ systematic risk -
1.2 The Market Portfolio
This is a preview. There are 7 more flashcards available for chapter 1.2
Show more cards here -
What is market capitalisation? How is it calculated?
Market Capitalization: Total marketvalue offirm i’soutstanding shares
MV = Number ofShares of i Outstanding * price of i per share -
What is value-weighted portfolio? How is it calculated?
Value-Weighted Portfolio : Aportfolio in which eachsecurity is held inproportion to its marketcapitalization -
How can the market risk premium be estimated?
The market risk premium (E[RMkt]− rf) can be estimated using historical risk premiums -
What should the risk-free rate we choose correspond to?
The risk-free rate we choose should correspond to the yield for an average horizon. -
What are the two drawbacks of using historical data for estimating the market-risk premium?
Usinghistorical data for estimating themarket-risk premium has twodrawbacks :- Despite data for 50 (or more) years the
standard errors of estimates are large. - Estimates are
backward looking, and may therefore not represent the currentexpectations .
- Despite data for 50 (or more) years the
-
What is the formula to estimate the market-risk premium using dividend and dividend yield?
Dividend yield + Expected Dividend Growth Rate -
1.3 Beta Estimation
This is a preview. There are 4 more flashcards available for chapter 1.3
Show more cards here -
What does the beta correspond to?
Beta corresponds to the slope of the best-fitting line in the plot of the security’s
excess returns versus the market excess return.
- Higher grades + faster learning
- Never study anything twice
- 100% sure, 100% understanding
For my 1st exam I got a C. Then, I started looking for ways to learn better and I came across Study Smart. Since then I have scored a A+, A, A- and another A. I highly recommend it to everyone who wants to hear it. I am so happy with it!!
I was struggling to finish all my first-year subjects for 3 years. Then I discovered Study Smart, which helped me to finish all of them within 3 months.
Because of StudySmart, things are going well in many ways. Before, I always had study stress and no time for anything. Now I feel calm and confident (because of the program). I used to score a B, now I usually score an A or A+.
Hey Chris, I really want to thank you very much for developing the platform, I usually got around C for my exams, now I scored an A+, an A and a A- !!
Since using Study Smart, my average has increased significantly. I even completed a statistics course with a A+ while I'm bad at statistics. I took on extra courses this year, because of Study Smart. Thanks so much!
Ever since I started studying with StudySmart I passed all my exams !!! No more re-sits!! At first, I was happy with a pass and now I only get good grades. Many thanks!
I aced all the courses I studied with Study Smart. For law, I first scored a D, and now an A! I’m 100% sure that I’ll pass all the courses I study with Study Smart.
I always thought I studied well. My grades were fine. I could never have imagined that applying these study skills would have such a huge and direct impact on my grades, my speed and the pleasure I have in learning.
For the first time, I finally feel totally confident about the way I learn. I have the perfect overview and make great progress in terms of speed and the grades I get. Thanks, Chris!
I immediately started to enjoy learning again, and my grades soared. All of a sudden, everything went better. I highly recommend Study Smart to all students..
Being able to create my materials online made the process of studying so much smoother and quicker. I no longer have to spend a huge amount of my time on creating my summaries.
At first, my notes were a mess. Now I use Study Smart to take my notes in a perfectly structured way. It helps me to save a lot of time and do other things I enjoy.
Students that study with Study Smart get better grades. The system applies all the learning methods in such a way that both well-performing students and students who struggle perform much better.
Hi Chris, I would like to thank you very much. Last year I scored C on a course, and this year I got an A+ thanks to your method! Thank you very much!
The largest effect is that my child is more enthusiastic about school! Every parent wants their children to be happy at school, Study Smart made it happen.
In high school, I failed several exams, and that has really changed now. I actually needed this tool very much back then. Since I started studying with StudySmart, I haven't had any D's. My average score is now an A and those are results I would have never had in the past
With my old method, I passed only 3 out of 8 courses. Since I started taking my notes digitally in Study Smart, I have passed all my courses on the first try. For me, StudySmart takes away the stress of wondering if I will pass or not.
Thanks to StudySmart, I passed all my exams, and with better grades than before! On top of that, I have mastered a very good study method now, which I am confident will help me earn my degree.
