Estimating Betas in Practice: Alternatives That Matter and Those That Do Not

6 Pages Posted: 19 Jan 2019

See all articles by George S. Ford

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Date Written: January 9, 2019

Abstract

In this PERSPECTIVE, I demonstrate that Betas are nearly identical whether or not the returns are adjusted for dividends and whether raw returns are used instead of excess returns. By far, the choice of using weekly or monthly returns or estimating two- or five-year Betas are more impactful than is the accounting for dividends or the risk-free rate. That said, simpler, less data-intensive
estimates of Beta appear valid.

Keywords: Beta, Financial Analysis, Portfolio, Cost of Capital, Cost of Equity

JEL Classification: G11, C10, C80

Suggested Citation

Ford, George S., Estimating Betas in Practice: Alternatives That Matter and Those That Do Not (January 9, 2019). Available at SSRN: https://ssrn.com/abstract=3312894 or http://dx.doi.org/10.2139/ssrn.3312894

George S. Ford (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
23
Abstract Views
249
PlumX Metrics