Session 7: Measuring Relative Risk - Betas and Alternatives
from Aswath Damodaran Hosted by Aswath Damodaran
In this session, we discussed how to measure the relative risk of a company, starting with betas (regression versus bottom up) but also examining alternative measures of relative risk, some based on prices and some on accounting earnings. In short, the end game is coming up with a risk-adjusted cost of equity (discount rate), and the process is open to alternatives to what you may see as flawed measures of risk.Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdfSlides: https://nyu.box.com/s/2p0zkb6krm1htxkjmwqz991lkxo3bvxrPost class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Atest.pdfPost class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session7Asoln.pdf
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