The aim of this thesis is to study the risk for two Swedish companies, Axfood and Volvo. To test the required return on equity, a bottom-up beta approach and a CAPM regression beta are used. This thesis concludes that the bottom-up beta gives a truer reflection and a more updated beta value than a CAPM regression beta on the firm’s current business mix, the CAPM beta takes only the past stock prices into consideration. The empirical results for Volvo conclude that the levered bottom-up beta is 1.09 and the CAPM β is 0.52 for Volvo. The empirical results for Axfood which is categorized as consumer goods sector implies that the levered bottom-up beta is 0.87 while the CAPM regression beta is 0.29.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:his-141 |
| Date | January 2007 |
| Creators | Ljungström, Divesh |
| Publisher | Högskolan i Skövde, Institutionen för teknik och samhälle, Skövde : Institutionen för teknik och samhälle |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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