Introduction to Beta in Corporate Finance

Рет қаралды 172,478

8 жыл бұрын

This video shows what beta is in the context of Corporate Finance. Beta is the percentage change in an asset's return, given a 1% change in the return of the market portfolio (an index such as the S&P 500 is commonly used to proxy for the market portfolio. Beta is important because it measures the amount of systematic risk an asset has. Because unsystematic risk (firm-specific risk) can be diversified away, the systematic risk of an asset is what determines the risk premium demanded by investors for holding the asset. Thus, beta can be used to calculate the cost of a firm's equity capital (for example, with the Capital Asset Pricing Model).
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Пікірлер: 60

@Crowellnoob 7 жыл бұрын

You should teach professors who teach the art of teaching.

@willcrawford7896 4 жыл бұрын

the quality of these videos and explanations really make me hate my current professor, and the fact that I spent 3 grand just to have to come back to KZfaq to teach myself.

@africarib 4 жыл бұрын

I spent $1800 for a review course and still have to come reference his videos

@am3849 4 жыл бұрын

crying while watching your lectures before my finance final. Something I did not understand in two months I learned in 8 minutes. thank god for your videos

@marilynvco 2 жыл бұрын

I wish I had found your videos at the beginning of the semester. You are a phenomenal teacher! Thanks for helping me grasp difficult topics in corporate finance.

@linhnguyenthi4863 6 жыл бұрын

I had just finished the final exam, and all of your teaching videos have helped me a lot. I just wana say: Thank you so much! and again

@Edspira 6 жыл бұрын

No problem, I'm glad you're doing well!

@linhnguyenthi4863 6 жыл бұрын

thank you so much!!

@knauxu Жыл бұрын

Thank you for the simple and straight forward explanation. One thing I don't appreciated about textbooks that don't belong in the STEM field is how convoluted they make the concepts with bad explanations and unnecessary jargon. All of your videos are great.

@far3582 5 жыл бұрын

You made my understanding of Finance and Accounting, so much easier! THANKS ALOT!

@injunejo3496 6 жыл бұрын

never commented on anything but YOU ARE THE BEST! my prof explained this for 3 courses i didn't get that but i just got it in 10 mins....

@Edspira 6 жыл бұрын

Thank you my friend!!

@Eshakochhar 6 жыл бұрын

Your explanation is very lucid. It shows that you have thorough understanding of the topic you explain. Many thanks for your videos!

@agziyamuk 4 жыл бұрын

the dude's a professor so of course he understands

@zainabebrahim8392 2 жыл бұрын

Nicely and professionally explained! Can't thank you for making it easy to grasp! Bless you

@ariunbattsagaantsooj4059 4 жыл бұрын

Greetings from Austria. I have my final exam in corporate finance in few hours. Your videos helped me alot. Just wanna say thank you very much!

@Motorcyclist32 6 жыл бұрын

Well done sir. This is the way people should teach. I got it on the first take.

@Edspira 6 жыл бұрын

Thanks Moto! Good luck with your studies.

@AlaraDinc 3 жыл бұрын

As always... a great video! Literally got through college be because of you! Thank you 🙏🏼

@1Baltizar 6 жыл бұрын

Thank you so much! Your approach to teaching is what I have been searching for.

@Edspira 6 жыл бұрын

Awesome. Glad you found the channel!

@elainezhang2375 7 жыл бұрын

THANK YOU FOR SAVING MY LIFE BEFORE FINAL

@MrTheelicitor 5 жыл бұрын

Awesomely explained. Got it first time round. You're gifted!!! As thank you for your time and effort I subscribed and gave a thumbs up :)

@davidwickens9384 Жыл бұрын

I agree! I did not get it the first time through. I appreciate your delivery of this finance related material. More yet to learn from you, such as C.A.P.M.

@jessicaosullivan2483 5 жыл бұрын

This video was so helpful. Thank you so much! :)

@butterflyflyflyfly 5 жыл бұрын

Very helpful, thank you very much.

@amandapartlow6934 5 жыл бұрын

Thank you this was so helpful!! I hope I ace my exam

@luistato7437 3 жыл бұрын

Shocking how incredible you are compared to my professors. Once again KZfaq saving my grades 🤷‍♂️

@br_in_da Жыл бұрын

you're a lifesaver! thank you for your videos, your teaching style is simply amazing :)

@Edspira Жыл бұрын

Glad you think so!

@BlackxBanBan 8 жыл бұрын

Thank you so much!! I appreciate your work

@Edspira 8 жыл бұрын

Thank you!

@theshoppersreview165 4 жыл бұрын

I like ur explanation very clear 😍

@togggn 4 жыл бұрын

You've helped so much!

@mkr896 8 жыл бұрын

thank you sir

@venjaminschuster2797 2 жыл бұрын

thanks! Great explanation!'

@togggn 4 жыл бұрын

I feel I can learn anything from you!

@BossChronicles 4 жыл бұрын

We need more videos !!!!

@mm22sapphire50 7 жыл бұрын

i love you man

@arvinderkaur6996 7 жыл бұрын

very well explained...but how to get directed to next following video after this i don't get it... please let me know...if anyone know's it..ill appreciate it.

@ilajain1821 4 жыл бұрын

Thanku... Really explained well..

@Edspira 4 жыл бұрын

Most welcome 😊

@ponisaseaside3456 5 жыл бұрын

Legend !!

@nehahooda2449 6 жыл бұрын

Wonderful

@Edspira 6 жыл бұрын

Thanks Neha!

@AlaraDincYT 3 жыл бұрын

thank you !!

@liamdarke787 Жыл бұрын

Remember to hold yourself accountable

@Sophie-mv8gc 5 жыл бұрын

The example was easy to follow but if I wanted to invest in a company where would I find the good and bad economy percentage?

@theshoppersreview165 4 жыл бұрын

Agree

@hithesh7665 3 жыл бұрын

It is possible to get the percentages of a "good" and "bad" economy (but looking at a completed year of which all the stats are available) by checking the past results of a stock index such as the S&P 500 or a Stock Exchange as a whole.

@yonatanofek4424 5 жыл бұрын

hey that's some pretty nifty percentage arithmetics around 6:05! I'm 4 years through an engineering degree and I'm intrigued! How'd you do that? :D

@yonatanofek4424 5 жыл бұрын

oh lol that's just invisible parentheses missed it >

@srinivasthotla8676 3 жыл бұрын

do Beta values change every day for stocks?

@JCRMatos 6 жыл бұрын

Hello. Thanks for the video. I have 1 question. In my investment research I found 3 ways to calculate Beta and yours is the 4th. The ways I found where using a line regression (in Excel for example), the 2nd was using the formula beta=Covar(Returns, Market returns) / Var(Market returns) and the 3rd was beta=Covar(Returns - Rfr, Market returns - Rfr) / Var(Market returns - Rf). And now with yours counts 4. Which one is correct or which one should be used when? Thanks in advance. JM

@Edspira 6 жыл бұрын

There are multiple ways to calculate beta, which get you to the same place. For example, when you run a regression, the beta you obtain is the same as if you divided the covariance by the variance.

@JCRMatos 6 жыл бұрын

@@Edspira Hello, thanks for the reply. That is correct, line regression and the covar / var give the same value, but yours doesn't. When should I use yours instead of the line reg? Thanks. JM

@Edspira 6 жыл бұрын

In this video I just provide a simple example with a single company. My goal is not to show you how to calculate beta but to show how to understand what beta is. In this example, the beta is 2.5, which means the company is two and a half times riskier than the market portfolio. If you are trying to calculate the beta of a company in real life, I suggest regressing the monthly (or daily) excess returns of the company on the monthly ( or daily) excess returns of the market portfolio (e.g., the S&P 500).

@JCRMatos 6 жыл бұрын

Hello. Ok, thanks. JM

@theshoppersreview165 4 жыл бұрын

Where did you get that 30 and 50 percent is that only an estimation?

@azrulrhm 4 жыл бұрын

eisle gomez that is historical data