THE EXCESS RETURN ARGUMENT AND DOUBLE LEVERAGE

William Beranek; James A. Miles

doi:10.1111/j.1540-6288.1988.tb00781.x

THE EXCESS RETURN ARGUMENT AND DOUBLE LEVERAGE

William Beranek, James A. Miles

Finance

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1 Scopus citations

Abstract

The excess return argument is widely accepted as the most compelling plea in favor of the double leverage method of assessing the cost of capital for certain utilities. The argument is shown to be mistaken. Moreover, only under unlikely conditions does the double leverage method assess the cost of capital correctly. The stand alone method, according to generally accepted financial theory, is a superior procedure.

Original language	English (US)
Pages (from-to)	143-150
Number of pages	8
Journal	Financial Review
Volume	23
Issue number	2
DOIs	https://doi.org/10.1111/j.1540-6288.1988.tb00781.x
State	Published - May 1988

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

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10.1111/j.1540-6288.1988.tb00781.x

Cite this

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abstract = "The excess return argument is widely accepted as the most compelling plea in favor of the double leverage method of assessing the cost of capital for certain utilities. The argument is shown to be mistaken. Moreover, only under unlikely conditions does the double leverage method assess the cost of capital correctly. The stand alone method, according to generally accepted financial theory, is a superior procedure.",

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AB - The excess return argument is widely accepted as the most compelling plea in favor of the double leverage method of assessing the cost of capital for certain utilities. The argument is shown to be mistaken. Moreover, only under unlikely conditions does the double leverage method assess the cost of capital correctly. The stand alone method, according to generally accepted financial theory, is a superior procedure.

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THE EXCESS RETURN ARGUMENT AND DOUBLE LEVERAGE

Abstract

All Science Journal Classification (ASJC) codes

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