Sunday, April 17, 2016
2016 Valuation Handbook—Guide to Cost of Capital
Let me say something I rarely say here: this book was beautifully produced. Printed on high quality, heavy stock and measuring 8 1/2” x 11,” it is well designed, with a font size that doesn’t produce eye strain and with clean, easily readable tables with red accents that match the display type. I can’t easily say how long the book is because it isn’t paginated consecutively but rather section by section.
Back to the content of the book. It analyzes the basic building blocks of the cost of equity capital: the risk-free rate and equity risk premium, the size premium, betas and industry risk premia, and company-specific risk premia. Using data from the Center for Research in Security Prices (CRSP), the authors compare the CRSP deciles size premia studies and the risk premium report studies. They offer examples of CRSP deciles size premia and provide general information about the risk premium report exhibits, as well as examples of the same.
This is not a book for the casual investor, but for those interested in careful corporate valuation it’s a treasure trove. The book is not currently available through Amazon but only directly from Wiley.