Lent Term - Lecture 7

Question 1

What are the potential sources of value from any real asset?

Answer 1

1) Future cash flows generated by the asset

2) Subsidies from the government that derive from the specific way in which the real asset is financed

Question 2

What is the problem with using the beta of similar publicly traded companies?

Answer 2

We need the beta of the cash flows of the asset. using another companies beta looks at the cash flows of their assets so we need to unloved these betas