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Session 9: More on beta - bottom up betas and private company betas
Description
In this session, we continued the discussion of betas being weighted averages, and used the concept to estimate the beta for Disney, starting with its businesses and working up to the beta of the company, and we repeated that process with the other companies in our mix - Vale, Tata Motors, Baidu and Deutsche Bank. We ended the class by talking about how to estimate the cost of equity, when an investor/buyer is not diversified, and noted that this can explain why private companies end up as parts of publicly traded companies.
Slides: https://nyu.box.com/s/d2s60tjtpvonbpbeknbbwvim52sk3q27
https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9test.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9soln.pdf
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