This book is a comprehensive introduction to financial modeling that teaches advanced undergraduate and graduate students in finance and economics how to use R to analyze financial data and implement financial models. This text will show students how to obtain publicly available data, manipulate...

Firms compensate management with executive stock option plans to mitigate the agency problem arising from conflicts of interest between shareholders and managers. However, due to the nature of stock options, the value to the option holder increases when the volatility of the underlying stock...

In this paper, I evaluate whether there is a size effect that is relevant to the cost of equity. I first analyze what model investors use to determine the required rate of return on their investment and find investors prefer the Capital Asset Pricing Model (CAPM) over other models, even those...

Executive stock option plans have been used by firms to compensate management to mitigate the agency problems arising from conflicts of interest between shareholders and managers. However, due to the nature of stock options, the value to the option holder increases when the volatility of the...

Practitioners commonly augment the CAPM cost of equity by adding the Size Premium in Excess of CAPM published in the Ibbotson and Duff & Phelps yearbooks. However, the empirical evidence following Banz's paper in 1981 does not support the existence of a size premium. Moreover, even if a size...