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:

Dental Force

The magnitude of pressure applied by the teeth during biting or chewing.

Crushing

Crushing describes the act of applying force to break or compress materials or structures, often used in processes involving the reduction of size in solid materials.

Grinding

A process that involves breaking down materials into finer particles using mechanical or other means.

Homo Heidelbergensis

An extinct species of the genus Homo, known from fossils dating from 600,000 to about 200,000 years ago and considered a possible ancestor to both Neanderthals and modern humans.