The Determinants of Systematic Risk and the Cost of Capital for the Regulated Electric Utility Industry (Classic Reprint) - Hardcover

Bruce Edward Stangle

Hardcover

ISBN 10: 0265921376 ISBN 13: 9780265921371

Publisher: Forgotten Books, 2018

Synopsis

Understand how risk and regulation shape electric utilities’ costs of capital.

This nonfiction work applies the Capital Asset Pricing Model (CAPM) to determine the opportunity cost of capital for the regulated electric utility industry.

The book examines how regulatory policy, financial structure, and industry factors influence systematic risk and the cost of equity. It presents a single-equation model tested on a sample of sixty-two electric utility firms, with methods to validate forecasts and assess the impact of regulation on risk.

• How CAPM defines risk as a security’s covariance with the market, not its own volatility.
• How regulatory elements and industry structure can shift a utility’s systematic risk and required return.
• Model validation through historical simulations, ex post forecasts, and ex ante forecasting exercises.
• Discussion of data handling, heteroscedasticity corrections, and robustness checks across multiple equations.

Ideal for readers of financial economics, regulation studies, and those seeking a rigorous view of how capital costs are determined in regulated utilities.

Edition details

• Publisher: Forgotten Books
• Publication date: 2018
• Language: English
• ISBN 10: 0265921376
• ISBN 13: 9780265921371
• Binding: Hardcover
• Number of pages: 105