Harvard Business Review

MARCH 10, 2011

knew that firms were making heavy use of the capital asset pricing model (CAPM) to size up growth opportunities, but that the model was only as good as its inputs. But that article was written a decade ago, and still the CAPM rules — and as for how to come up with the crucial inputs to it, well, practice remains all over the map.

CAPM 14

CAPM Cost Discounted Cash Flow Cost of Capital 14

Harvard Business Review

MARCH 10, 2011

In estimating the cost of equity, nearly nine out of ten organizations use the capital asset pricing model (CAPM), which calculates the cost of equity using a risk-free rate, beta factor, and a market risk premium, each of which introduces significant variability.

Cost of Capital 13

Cost of Capital CAPM Cost Discounted Cash Flow 13

Harvard Business Review

JANUARY 15, 2014

respectively, suggesting that market risk is the major driver of our inability to predict. Look at the variance of your new-market products. Though there are multiple types of prediction, the gold standard is the prediction of precise outcomes.

Black-Scholes 8

Black-Scholes Productivity Products CAPM 8