Discuss Possible Bias Inherent in Estimating the True Beta Value

question 7

Essay

Discuss possible bias inherent in estimating the true Beta value according to Lintner and Douglas.What are the findings of Miller and Scholes on the basis of this evaluation?

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Definitions:

Common Stock

Equity owning in a firm that grants shareholders voting rights and a share in the company's profits, typically through dividends.

Database

A structured set of data held in a computer, especially one that is accessible in various ways, used for storing and managing information digitally.

Amortized

The process of gradually paying off a debt over a period of time through regular payments.