A Firm Is Privately Owned, and Its Stock Is Not

question 28

True/False

a firm is privately owned, and its stock is not traded in public markets, then we cannot measure its beta for use in the CAPM model, we cannot observe its stock price for use in the DCF model, and we don't know what the risk premium is for use in the bond-yield-plus-risk-premium method.All this makes it especially difficult to estimate the cost of equity for a private company.

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Definitions:

Kierkegaard

A Danish philosopher and theologian considered the father of existentialism, who explored the complexities of individual existence, choice, and faith.

Alienation

Describes the estrangement of individuals from themselves, their work, or society, often discussed in the context of labor and social structures.

Sartre

Jean-Paul Sartre, a French existentialist philosopher, playwright, novelist, political activist, and literary critic noted for his analysis of the nature of existence and freedom.