If a Firm Is Privately Owned,and Its Stock Is Not

question 18

True/False

If 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:

Weaned

The process of gradually introducing an infant or young animal to food other than its mother's milk, leading to a decreased dependence on maternal feeding.

Oral Stage

The first stage in Freud's psychosexual stages, occurring in the first 18 months of life, in which the mouth is the erogenous zone and weaning is the primary conflict.

Primitive Side

Primitive Side refers to the basic or instinctual part of human nature, often associated with innate drives, behaviors, or reactions that derive from our ancestral or evolutionary past.

Personality

Personality is the combination of thoughts, emotion patterns, and behaviors uniquely exhibited by an individual, distinguishing one person from another.