Discussion Assignment 4.2

Page 1 of 1

Beta

Activity Context

This discussion helps you develop the skills to master the following course competencies:

o Apply the theories, models, and practices of finance to the financial management of the firm.

Activity Instruction

Discuss beta and its importance. What type of investors would invest in a high beta stock and a low beta stock? Also, in your textbook, review the Real World case, focusing on "Beta, Beta, Who's Got the Beta?," on page 343. Despite the discrepancies, is beta a useful tool? Why were the beta estimates discussed in the reading different? Why would you as an investor rely on beta in the first place?

Support your post as appropriate with the theories presented in this week's required reading. At least 125 words minimum.

Readings (see attached)

Use your Corporate Finance: Core Principles and Applications textbook to read the following:

o Chapter 10, "Risk and Return: Lessons From Market History." o Chapter 11, "Return and Risk: The Capital Asset Pricing Model

(CAPM)." Pay particular attention to page 343, "Beta, Beta, Who's Got the Beta?" This information will be used Unit 4 Discussion 2.

o Chapter 12, "Risk, Cost of Capital, and Capital Valuation."

Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2018). Corporate finance: Core principles and applications (5th ed.). New York, NY: McGraw- Hill.

Resources

o Discussion Participation Scoring Guide.