Estimates of systematic risk or beta are an important determinant of the cost of capital. The standard technique used to compile beta estimates is an ordinary least squares regression of stock returns on market returns using 4 - 5 years of monthly data. This convention assumes that a longer time...

The standard valuation technique - discounted cash flows (DCF) - estimates value as the present value of expected future cash flows. This technique is typically implemented under an assumption that investment policy is independent of prices. In reality, management responds to fluctuating...