How does a difference between 10-year treasury bond rate and a 10-year TIPS rate get an accurate value of Inflation? Did not understand the logic behind it
Hi, can there be something between the two extremes: a fully diversified investor and an investor invested in a single asset, and should/could you tweak the Beta/Cost of Equity to reflect a degree of diversification and its effect on Cost of Capital?
You should use a total risk measure anytime you do not diversify your own portfolio. For example, If you invest in one single company, either private or public, you should require the total risk return.
After every lesson when you say "thank you for listening" I reply aloud "Thank you professor"
β = σ(Share) / σ(Market Portfolio) x corr(Share, Market Portfolio),
with that formula it is easier to understand the R-squared adjustment.
Great lesson, thank you
Thanks a lot professor!
How does a difference between 10-year treasury bond rate and a 10-year TIPS rate get an accurate value of Inflation? Did not understand the logic behind it
Hi, can there be something between the two extremes: a fully diversified investor and an investor invested in a single asset, and should/could you tweak the Beta/Cost of Equity to reflect a degree of diversification and its effect on Cost of Capital?
If the private owner could diversify their overall portfolio and this business is a small fraction of their total holdings, would the beta be lower?
Depending on the kind of diversification, yes
You should use a total risk measure anytime you do not diversify your own portfolio. For example, If you invest in one single company, either private or public, you should require the total risk return.
Thx
why is a publicly traded company expected to diversify its business