PRACTITIONER’S BRIEF:  Turn Seemingly Irrelevant Beta Into A Potentially Powerful Predictive Tool Using The Implied Cost Of Capital

Stefanie Ng    Wenyun Shi, Yexiao Xu
15 Jun 2017
Categories: Fundamental Analysis, Investment Management, Equity Investments

Country or region: Asia Pacific (Overall)

WHAT’S THE INVESTMENT ISSUE? Still widely considered as bedrock financial theory yet often criticized, CAPM is a simple, formal methodology to price securities. Its fundamental idea of systematic risk is reflected in all modern asset-pricing theory. Because math-based models are built on sets of assumptions (e.g., “markets are frictionless and efficient”) ......

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