Premium
Return, Risk and Cost of Equity for Stock S&L Firms: Theory and Empirical Results
Author(s) -
Lee Cheng F.,
Lynge Morgan J.
Publication year - 1985
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00348
Subject(s) - loan , economics , profitability index , cost of capital , equity (law) , return on equity , equity risk , stock (firearms) , equity capital markets , finance , cost of equity , weighted average cost of capital , business , monetary economics , financial economics , financial capital , microeconomics , profit (economics) , capital formation , private equity , mechanical engineering , political science , law , engineering
This study examines the current deregulated environment for and the financial position of savings and loan associations. It is argued that in a less regulated, more competitive environment managers of savings and loan associations will have to become more proficient in using financial management techniques to assure the survival and the return to profitability of their associations. One aspect of financial management is a more careful estimation of and use of the cost of equity capital, especially for the increasing number of associations that have converted from mutual to stock organizations. Different approaches to the estimation of the cost of equity capital are discussed and monthly stock prices of 35 stock savings and loan associations are used to estimate representative costs of equity capital.