Alternative Model Uses Corporate Bond Yields to Measure a Size Premium

Business Valuation UpdateVol. 20 No. 2
February 2014
Michael Dobner, MBA, BA


Valuation practitioners commonly rely on the capital asset pricing model (CAPM) to estimate cost of equity. Under CAPM, risk is attributed to a single factor, “beta,” which measures systematic risk, the only type of risk theoretically rewarded under CAPM ...