If a Firm Is Privately Owned, and Its Stock Is

question 14

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.

Gain knowledge on best practices and critical strategies for effective international social media management.

Understand the role and impact of unions on wage disparity.

Recognize the concept of compensating differentials and how they contribute to wage disparities.

Grasp the marginal productivity theory of income distribution and its implications.

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Definitions:

Level of Significance

The probability of rejecting the null hypothesis in a statistical test when it is actually true; a measure of statistical significance.

Sum of Squares

A statistical technique used to describe the total variation in a dataset.

Error

The difference between a measured or observed value and the true value of the quantity of interest.

Normal Probability Distribution

A continuous probability distribution. Its probability density function is bell-shaped and determined by its mean m and standard deviation s.