Anastasiia Zbandut is a Ph.D. candidate at Otto von Guericke University Magdeburg, Germany. She started her academic career in Ukraine where she gained working experience as a financial assistant. Currently, she gives courses in company valuation, security analysis, and performance measurement. Her main research fields include corporate finance, option pricing theory, and credit risk.
In cost-of-capital computations, credit risk is only taken into consideration at the level of the debt beta approach. We show that applications of the debt beta approach in company valuation suffer from unrealistic assumptions about the market index and…