Please use this identifier to cite or link to this item: http://hdl.handle.net/11718/22083
Full metadata record
DC FieldValueLanguage
dc.contributor.authorVarma, Jayanth R.
dc.contributor.authorVirmani, Vineet
dc.date.accessioned2019-06-03T22:42:51Z
dc.date.available2019-06-03T22:42:51Z
dc.date.issued2016-07-11
dc.identifier.urihttp://hdl.handle.net/11718/22083
dc.description.abstractThis case is about the practical and conceptual issues involved in estimating the beta of a company for the purpose of computing the cost of capital using the CAPM (Capital Asset Pricing Model). In many applications of the CAPM in the classroom, the beta is assumed to be known or is exogenously specified. This case is an opportunity to confront the fact that, in the real world the beta has to be estimated and there is often a wide range of uncertainity (confidence interval)around any point estimate of the beta. The issue that Delaware Chencery Court Vice Chancellor Judge Travis Laster needed to resolve in October 2014 was that the beta estimated by te plaintiff and the defendant varied so substantially that they implied a difference of over $100 million in the valuation of Rural-Metro. The case provides alive context to discuss conceptual and statistical issues that are often glossed over as minor details of the estimation process. In the real world, these apparantely minor details make a big difference to the results and can no longer be ignored. In an advanced course, the case also provides an opportunity to expose the participants to the large academic literature on beta estimation.en_US
dc.publisherIndian Institute of Management Ahmedabaden_US
dc.relation.ispartofseriesF&A0534;
dc.subjectCapital Asset Pricing Modelen_US
dc.titleHundred Million Dollar Betaen_US
dc.typeCases and Notesen_US
Appears in Collections:Cases and Notes

Files in This Item:
There are no files associated with this item.


Items in IIMA Institutional Repository are protected by copyright, with all rights reserved, unless otherwise indicated.