Risk, Duration, and Capital Budgeting: New Evidence on Some Old Questions
Posted: 12 Feb 1999
Abstract
In a provocative article, Campbell and Mei suggest that systematic risk arises not because of correlation between a company's cash flow and the market return but primarily because of common variation in expected returns. If true, the Campbell-Mei hypothesis has important implications for capital budgeting, particularly at high-technology companies that have long duration, idiosyncratic investment projects. This article presents some new evidence related to the Campbell-Mei hypothesis and then evaluates the impact of the hypothesis with a case study of Amgen Corporation.
JEL Classification: G31, G32
Suggested Citation: Suggested Citation
Cornell, Bradford, Risk, Duration, and Capital Budgeting: New Evidence on Some Old Questions. Available at SSRN: https://ssrn.com/abstract=146745
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