How to realistically use beta in dcf valuation ? When Rsquared is low
Here me out, there is straight forward way to calculate beta using CAPM, but realistically this thing get unusable when Rsquared is low.
I am here to ask how do we realistically use reasonable alternative, is it industry peers? What if the company is small and comparable peers Rsquared also low? Is it using other more suited benchmark, if yes then what equity risk premium can we use? Do we have to calculate it? How?
u/ContentTrain7390 — 2 days ago