l2 31 return concepts

This class was created by Brainscape user Steven Popovic. Visit their profile to learn more about the creator.

Decks in this class (8)

a distinguish among realized holding period return, expected holding period return, required return, return from convergence of price to intrinsic value, discount rate, and internal rate of return;
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b calculate and interpret an equity risk premium using historical and forward-looking estimation approaches;
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c estimate the required return on an equity investment using the capital asset pricing model, the Fama–French model, the Pastor–Stambaugh model, macroeconomic multifactor models, and the build-up method (e.g., bond yield plus risk premium);
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d explain beta estimation for public companies, thinly traded public companies, and nonpublic companies;
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e describe strengths and weaknesses of methods used to estimate the required return on an equity investment;
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f explain international considerations in required return estimation;
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g explain and calculate the weighted average cost of capital for a company;
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h evaluate the appropriateness of using a particular rate of return as a discount rate, given a description of the cash flow to be discounted and other relevant facts.
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l2 31 return concepts

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