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How difference in beta effects estimates of cost of equity

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Problem 1: Beta is an important input in the Capital Asset Pricing Model (CAPM). Company A has a Beta of 1.35 listed on Yahoo Finance. However, another financial database lists Company A's beta as 0.9. Explain how it is possible that Beta calculation can differ for the same company. Explain how this difference in Beta effects the estimates of Cost of Equity when using the CAPM, and subsequent valuation estimations?

Reference no: EM132735319

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