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Lowering the Bar

How market beta can make hurdle rates look artificially low.

Don Durfee, CFO Magazine
November 1, 2006

Lowering the Bar

Interesting analysis of linking a company's beta to cost of capital. I can see the CoC relative to a company's credit rating, but linking to the stock price makes one think there's a dual parameter consideration when thinking about CoC and company. I know there's 10s of other metrics to consider when setting the hurdle rate, but bringing the outside stock price volatility is interesting addition. I will look into this further. Thx

Posted by Michael Kenny | November 02, 2006 09:14 pm

Lowering the Bar

Interesting analysis of linking a company's beta to cost of capital. I can see the CoC relative to a company's credit rating, but linking to the stock price makes one think there's a dual parameter consideration when thinking about CoC and company. I know there's 10s of other metrics to consider when setting the hurdle rate, but bringing the outside stock price volatility is interesting addition. I will look into this further. Thx

Posted by Michael Kenny | November 02, 2006 09:06 pm

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