Remove Beta Remove Finance Remove Market Risk Remove Weighted Average Cost of Capital
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Discount Rate—Explanation, Definition and Examples

Valutico

In DCF analysis, the Weighted Average Cost of Capital (WACC), representing the average return required by all stakeholders, is commonly used as the discount rate. The discount rate must be carefully chosen to reflect unique company risks and characteristics, and also changes in economic conditions.

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What is the Capital Asset Pricing Model (CAPM)?

Andrew Stolz

When an investor buys a particular security, they consider the risk of that security relative to the riskiness of the overall market and adjust the equity risk premium up or down by using Beta. What Impacts the Capital Asset Pricing Model? Investments are exposed to two types of risk: systematic and unsystematic.