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The magnitude and reliability of equity capital cost estimates: A statistical approach
Author(s) -
Thompson Howard E.
Publication year - 1985
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090060303
Subject(s) - cost of capital , dividend , econometrics , reliability (semiconductor) , equity (law) , economics , cost of equity , standard error , capital (architecture) , statistics , actuarial science , mathematics , finance , microeconomics , geography , physics , profit (economics) , power (physics) , archaeology , quantum mechanics , political science , law
The purpose of this paper is to illustrate a simple technique of estimating the cost of equity capital as well as a statistical measure of its reliability. The approach specifies a probability structure that is readily estimated from company dividend data, and front that structure both the estimated cost of capital and its standard error are calculated.