The Size Effect—It Is Still Relevant

BVResearch Pro
American Society of Appraisers Business Valuation Review™
Summer 2016 Volume 35, Issue 2 pp. 62-71
Roger J. Grabowski, FASA
cost of capital
risk premium report, size premium, capital asset pricing model (CAPM), size effect


Practitioners commonly incorporate a size premium when developing their cost of capital estimates using the modified capital asset pricing model (MCAPM). This article is intended to correct common misconceptions about the size premium and demonstrate that data from recent periods support the continued use of a size premium.
The Size Effect—It Is Still Relevant
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