Systems and Methods for Determining Cost of Capital for an Entity in a Bottom-Up, Fully Risk-Based Manner
First Claim
1. A method for determining a cost-of-capital for a business entity, the method comprising:
- providing one or more risk drivers by identifying one or more scenarios, each scenario having a potential impact on one or more risk drivers, and quantifying said one or more risk drivers for each scenario;
determining one or more entity returns, and optionally one or more market returns, based on said one or more risk drivers;
determining one or more entity risk measures based on the entity returns and optionally the market returns;
determining a cost-of-capital for the entity based on one or more of the entity risk measures; and
determining a price or rate for goods or services based on the cost-of-capital for the entity, or determining a capital charge based on the cost-of-capital for the entity, or determining a tax liability of the entity based on the cost-of-capital for the entity, or determining a budget for the entity based on the cost-of-capital for the entity, or acquiring or selling an entity based on the cost-of-capital for the entity, or offering to acquire or sell an entity based on the cost-of-capital for the entity.
0 Assignments
0 Petitions
Accused Products
Abstract
The present invention relates generally to determining cost-of-capital in a bottom-up, fully risk based manner. In particular, the present invention relates to methods, systems, and software tools for calculating the cost-of-capital for a business entity. One or more risk drivers are provided by identifying one or more scenarios and quantifying the drivers for each scenario. Based on the risk drivers, one or more entity returns, and optionally one or more market returns, are determined, and based on the entity returns and optionally the market returns, one or more entity risk measures are determined. A cost-of-capital for the entity may be determined based on one or more of the entity risk measures.
-
Citations
47 Claims
-
1. A method for determining a cost-of-capital for a business entity, the method comprising:
-
providing one or more risk drivers by identifying one or more scenarios, each scenario having a potential impact on one or more risk drivers, and quantifying said one or more risk drivers for each scenario; determining one or more entity returns, and optionally one or more market returns, based on said one or more risk drivers; determining one or more entity risk measures based on the entity returns and optionally the market returns; determining a cost-of-capital for the entity based on one or more of the entity risk measures; and determining a price or rate for goods or services based on the cost-of-capital for the entity, or determining a capital charge based on the cost-of-capital for the entity, or determining a tax liability of the entity based on the cost-of-capital for the entity, or determining a budget for the entity based on the cost-of-capital for the entity, or acquiring or selling an entity based on the cost-of-capital for the entity, or offering to acquire or sell an entity based on the cost-of-capital for the entity. - View Dependent Claims (2, 3, 4, 5, 12, 13, 21, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 36, 37)
-
-
6-11. -11. (canceled)
-
14-20. -20. (canceled)
-
22. (canceled)
-
34-35. -35. (canceled)
-
38-40. -40. (canceled)
-
41. A system for calculating a cost-of-capital for a business entity, the system comprising:
-
a module for quantifying one or more risk based on one or more scenarios, each scenario having a potential impact on one or more risk drivers; a module for determining one or more entity returns, and optionally one or more market returns, based on said one or more risk drivers; a module for determining one or more entity risk measures based on the entity returns and optionally the market returns; and a module for determining a cost-of-capital for the entity based on one or more of the entity risk measures. - View Dependent Claims (42, 43)
-
-
44-45. -45. (canceled)
-
46. A computer-readable storage medium including a set of instructions for a computer, the set of instructions comprising:
-
a scenario specification routine for identifying one or more scenarios and providing one or more risk drivers based on at least one identified scenario; a return series determination routine for using the one or more risk drivers to determine one or more entity returns, and optionally one or more market returns; a risk measure determination routine for using the entity returns and optionally the market returns to determine one or more entity risk measures; a cost-of-capital determination routine for using the one or more entity risk measures to determine a cost-of-capital for the entity.
-
-
47-56. -56. (canceled)
Specification