Editorial Type:
Article Category: Research Article
| Online Publication Date: 01 Dec 2014
Why Total Beta Produces Arbitrary Valuations: A Violation of the “No-Arbitrage” Principle
Why Total Beta Produces Arbitrary Valuations: A Violation of the “No-Arbitrage” Principle
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Page Range: 131 – 135
Meaningful evaluation equations must be in line with the no-arbitrage principle. If they are not, one can derive any company value from them. This is unacceptable both for practitioners and for academics. This paper shows that total beta does not meet the no-arbitrage principle.
Copyright: American Society of Appraisers
Contributor Notes
Dominica Canefield, Lutz Kruschwitz, and Andreas Löffler are all at the Freie Universität Berlin, Boltzmannstrasse 20, Berlin, Germany. Professor Lutz Kruschwitz is professor emeritus of banking and finance; Andreas Löffler is professor of banking and finance, E-mail al@wacc.de; and Dominica Canefield is a doctorate student at his chair.