An empirical test of the arbitrage pricing theory—the case of indian stock market debarati basu deepak chawla abstract with increasing doubt about the validity of the one-factor capital asset pricing model in pricing finan- cial assets, development of newer models or extensions has become the order of the day.
Beta: calculation of weighted average cost of capital (wacc) for discounted cash flow (dcf) valuation - the coca-cola company (ko | usa | soft drinks. This case examine the implications of the merger of pepsi co and quaker oats company for the rivalry between coca-cola co and pepsico, and for value there are three main techniques that analysts use to calculate the cost of equity, the capital asset pricing model (capm), the dividend discount.
In most cases, a higher roe is preferred however, there are many other factors we must consider prior to making any investment decisions return on equity = net profit ÷ shareholders equity roe is assessed against cost of equity, which is measured using the capital asset pricing model (capm) – but. This paper derives ross's mutual fund separation theory and a new, equilibrium version of ross's arbitrage pricing theory as special cases of a general theory the paper also reveals that the two theories are identical in their predictions of asset prices and portfolio returns the capital asset pricing model (a restricted case of.
We will cover the following models among many: capital asset pricing model ( capm) multi factors - fama-french build-up model for example, suppose that all investors think that the expected return on common stock of the coca- cola co (nyse:ko) will be 6% and general electric company (nyse:ge) will be 8. Full-text paper (pdf): calculating the beta coefficient and required rate of return for coca-cola article (pdf available) in journal of business case studies november 2010 with 3,794 reads of the survey respondent uses the capital asset pricing model (capm) to determine the component cost of common.