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  "documentTitle": "Bear Stearns | Investment Banking Pitch Book | 36 slides",
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  "authorName": "Bear Stearns",
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  "presentationDate": "2005-01-01 00:00:00",
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  "notes": "Includes specific definitions for CAPM variables and guidance on data sources like Bloomberg and BARRA.",
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      "kind": "disclaimer",
      "text": "If you're evaluating a small to midcap situation (less than $4.144 billion in market capitalization), add a 0.6% to 2.6% premium to the cost of equity.",
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      "kind": "framework",
      "text": "K_E = R_F + β[R_M - R_F] + S",
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      "kind": "paragraph",
      "text": "The Capital Asset Pricing Model (\"CAPM\") may be used to estimate a company's cost of equity based on the risk-free rate plus a premium for equity risk.",
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      "text": "(1) The long-term risk free rate should be estimated by the interpolated 20 year US Treasury rate available on Bloomberg. (2) Source: Ibbotson Associates: Stocks, Bonds, Bills, and Inflation, 2001 Yearbook.",
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      "text": "Risk-Free Rate: 20-year US Treasury; Market Risk Premium: 7.8%; Beta: 5-year historical adjusted",
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      "text": "Calculating the Cost of Equity Capital",
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