Session 9: Bottom Up Betas
from Aswath Damodaran Hosted by Aswath Damodaran
This session is a grind with numbers building on top of numbers. In specific, we looked at how to estimate the beta for not only a company but its individual businesses by building up to a beta, rather than trusting a single regression. With Disney, we estimated a beta for each of the five businesses it was in, a collective beta for Disney's operating businesses and a beta for Disney as a company (including its cash). If you got lost at some stage in the class, here are some of the ways you can get unlost:1. Review the slides that we covered today.2. Try the post-class test and solution. I think it will really help bring together some of the mechanical issues involved in estimating betas.3. Read this short Q&A on bottom up betas which highlights the estimation process and some of its pitfalls:http://www.stern.nyu.edu/~adamodar/New_Home_Page/TenQs/TenQsBottomupBetas.htmSlides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr17/session9.pdfPost class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9test.pdfPost class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9soln.pdf
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