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| Case Study: How to Develop and/or Select Defensible Industry Betas for Use in the CAPM (1659Q) |
Course CPE: 2 hours
Field(s) of Study: Finance–1 hr; Statistics–1 hr
Program Level: Intermediate
Prerequisites: Previous training or research on subject matter being taught. Such persons are often at a mid-level within the organization, with operational and/or supervisory responsibilities.
Advanced Preparation: None
Delivery Method: QAS Self-Study
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Number: 22BV1216CSH
Shipping Weight: 0lbs. 0oz. |
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$147.00 |
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Recording Date: December 16, 2022
Presenter: Jim Harrington, Carla Nunes
Program Description:
This session will provide techniques, tips, and tricks on how to select betas to improve your cost of equity estimates and defend your selections. Valuation professionals using build-up methods will learn how to convert beta selections into industry risk premium adjustments. We will also present a case study to walk through the beta selection process in practice.
After completing this course, you will be able to:
- Identify different methodologies that can be used to estimate Capital Asset Pricing Model (CAPM) betas
- Select, apply, and convert CAPM betas into Industry Risk Premia for use in Build-Up methods
- Determine different stock returns frequency and time period used to compute betas and which may be more appropriate in the current market environment
- Select and apply simple statistical methods to beta estimates of comparable companies when deciding which betas to use
- Identify and discuss forward-looking adjustments to betas (Bloom and Vasiceck) and advantages and disadvantages of each
- Recognize the distortions caused by COVID-19 on industry betas and capital structures and how to adjust for them
- Recognize different beta unlevering methods and identify situations when the traditional Hamada formula may not be appropriate
For more information regarding refund or concerns, please contact our offices at (800) 677-2009.
The Consultants’ Training Institute (CTI) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.
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