This monologue podcast focuses on estimating the cost of equity, a crucial element in finance. The speaker begins by explaining the importance of using long-term government bond yields for this calculation, contrasting it with the riskier approach of rolling over short-term T-bills. The discussion then delves into estimating expected market returns, emphasizing the use of multiple approaches (historical data, market fundamentals, expert forecasts) and the inherent judgment involved. Finally, the speaker details methods for estimating beta, highlighting the challenges of using historical data to predict future volatility and the importance of considering industry trends and market conditions. The podcast concludes with a practical example using TELUS data in 2018, demonstrating how to apply different methods and arrive at a weighted average cost of capital.
