Company- Walt Disney

    Explain the three types of risk and beta, and how these concepts relate to a company’s required rate of return. Find your company’s beta from a credible source. You can get this information from the Mergent database or by looking it up on a financial website like Yahoo! Finance (Links to an external site.). Compare your company’s beta to the market beta of 1.0. Calculate the company-specific required rate of return using the CAPM formula. Show all calculations. Use the beta you determined for your chosen company Use a risk-free rate of 2.0%. For the market risk premium, use the following assumptions: For a large capitalization company (greater than $10.0 billion in market capitalization) use 6.0% as the market risk premium. For a mid-cap company (between $2.0 billion and $10.0 billion in market capitalization) use 8.0% as the market risk premium. For a small-cap company (less than $2.0 billion in market capitalization) use 11.0% as the market risk premium. Compare the company-specific required rate of return you calculated to the required return based on size you used in Section 3: Dividend Analysis and Preliminary Valuation in Week 3 for the constant growth formula. Determine whether the company-specific required rate of return higher or lower than the rate of return based on size that you used in Section 3 in Week 3 for the constant growth formula? Explain the difference in required rate of returns.