Finance: bonding and risk (coco-cola)
Moreover, using equity capital also helps keep Coca-Cola’s balance sheet healthy since there won’t be any added interest payments that need to be paid out each period. It allows them to maximise their profits, while also maintaining strong financial positions that can be trusted by investors and others. use the Capital Asset Pricing Model (CAPM) to evaluate a company’s stock?
The Capital Asset Pricing Model (CAPM) is used to evaluate a company’s stock by calculating its expected return given the risk-free rate and market risk premium. It helps investors decide whether a stock worth investing in. The model compares the expected return to other stocks from the same industry. To calculate an expected return on a stock we first need to determine its rate of return. This is equal to Beta + Market Risk Premium. The beta coefficient measures how much volatility an individual security has compared to an overall market index such as the S&P 500. After this calculation, investors are able to compare their investments returns with those of other companies.