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Beta Explained: What It Is and How to Calculate It

Valutico

Market Risk-Free Rate: Beta calculations often involve comparing the asset’s returns to a risk-free rate, such as the yield on a government bond with a similar maturity. The risk-free rate serves as the baseline return with no market risk and provides context for assessing an asset’s risk premium.

Beta 52
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Startup Valuation: The Ultimate Guide

Equidam

10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 23] Risk-Free Rate: Tied to government bond yields (e.g.,