Summary
Business valuation experts have lost credibility because they cannot support the company-specific risk premium (CSRP) in the capital asset pricing model (CAPM). Although most valuation and finance professionals agree that risks beyond market risk as measured by beta (β) increase a private company's cost of common equity (Ke), they have been unable to agree on the effect.
Using Total Beta and the Butler Pinkerton Calculator to Solve the CAPM Credibility Problem
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Copyright American Society of Appraisers
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