Doherty, Neil A. - In: Journal of Applied Corporate Finance 17 (2005) 3, pp. 119-123
In a recent "JACF" article, Prakash Shimpi proposed a new way of calculating a firm's cost of capital that incorporated a concept of "risk capital" as well as operational capital. The premise of the Shimpi approach was that purchasing hedging instruments effectively "releases" equity that is no...