Editorial Type:
Article Category: Research Article
| Online Publication Date: 01 Sept 2010
Using Total Beta and the Butler Pinkerton Calculator to Solve the CAPM Credibility Problem
Using Total Beta and the Butler Pinkerton Calculator to Solve the CAPM Credibility Problem
ASA, CFA
Page Range: 75 – 82
Business valuation experts have lost credibility because they cannot support the company-specific risk premium (CSRP) in the capital asset pricing model (CAPM). Although most valuation and finance professionals agree that risks beyond market risk as measured by beta (β) increase a private company's cost of common equity (Ke), they have been unable to agree on the effect.Abstract
Copyright: © 2010 American Society of Appraisers
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Contributor Notes
M. Mark Lee, ASA, CFA, is a Principal with Eisner LLP.