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invalidate its use for estimating the cost of capital for projects in making capital budgeting decisions. Since stocks are backed …
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Illiquidity measures appear to be related to monthly realized returns but do they impact long-run costs of capital (CoC) for firms? Using U.S. data, we find cross-sectional evidence that, controlling for market capitalization, the Amihud (2002) measure of illiquidity is negatively related to CoC...
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We argue that the CAPM may be a reasonable model for estimating the cost of capital for projects in spite of increasing …
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