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Cost of Capital

C/F/157. Can the CAPM serve as the basis for discounting multi-period risky cash flows? Explain the problem, and state and justify your answer to question

WORDS:
2500
DATE:
2007
PRICE:
29.99 GBP

The work outlines the CAPM theory, and argues that although the theory can be used for the single-period discounting, it is less practical for the multi-period experiments. The main problem is the changing parameters that have to be adopted, which make the formula extremely complicated and impractical. However, lack of alternatives makes the CAPM the best basis available for the new theoretical work

 

KEYWORDS: CAPM, multi-period, single-period, beta, discount rates, reassessment, evaluation,

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