We look at the Risk-Free Rate (RF) and the Market Risk Premium (MRP) used by analysts in 2015 to value companies of six countries. The dispersion of both, the RF and the MRP used, is huge, and the most unexpected result is that the dispersion is higher for the RF than for the MRP.We also find...

We show, as simply as possible, the model's development, its implications and the assumptions on which it is based.The paper also contains 307 interesting comments and criticism from several professors, finance professionals and Ph.D. students about the CAPM: 234 basically agree in using the...

The CAPM is about expected return. If you find a formula for expected returns that works well in the real markets, would you publish it? Before or after becoming a billionaire?The CAPM is an absurd model because its assumptions and its predictions/conclusions have no basis in the real world. The...

I review 150 textbooks on corporate finance and valuation published between 1979 and 2009 by authors such as Brealey, Myers, Copeland, Damodaran, Merton, Ross, Bruner, Bodie, Penman, Arzac… and find that their recommendations regarding the equity premium range from 3% to 10%, and that 51 books...

Regulators of many countries try to find the “true” WACC of Electricity, Gas, Water… activities. All their documents have in common a main confusion: they do not differentiate among expected, required, historical, and regulator allowed returns, which are 4 very different concepts. Most of...

My answer to the question in the title is NO. It is crystal clear that CAPM and its Betas do not explain anything about expected or required returns. There are mountains of evidence to support my stance.If, for any reason, a person teaches that Beta and CAPM explain something and he knows that...

The equity premium designates four different concepts: Historical Equity Premium (HEP); Expected Equity Premium (EEP); Required Equity Premium (REP); and Implied Equity Premium (IEP).lt;brgt;lt;brgt;We highlight the confusing message of the textbooks and academic articles regarding the equity...

We calculate betas of 3,813 companies using 60 monthly returns each day of December 2001 and January 2002. lt;brgt;lt;brgt;The median of [maximum beta/minimum beta] was 3.07. lt;brgt;lt;brgt;Industry betas are also very unstable. The median (average) of the percentage daily change (in absolute...