Growth Options, Beta, and Cost of Capital

Growth Options, Beta, and the Cost of Capital Object) by Antonio Bernardo, Bhagwan Chowdry, and Amit Goyal.This is a good one! It looks at the betas of firms' assets in place relative to the betas of their growth options and finds that the growth options have significantly higher betas. The authors then show that this difference in betas can lead to significant differences in cost of capital