Challenge a single-factor expected-return assumption.

Family Office Private Wealth Journal · Editorial research desk · 2 November 2026

Companion to The Capital Asset Pricing Model: Theory and Evidence by Eugene F Fama; Kenneth R French.

Decision in practice

The CIO uses a market model to evaluate a private operating business. An imprecise beta may look more objective than a transparent range.

Committee assignment

Present a comparable-company range and label what the model omits: concentration, valuation lag and liquidity. Compare conclusions under alternative assumptions.

Record and decision rule

Retain the sensitivity table. Require another valuation method if the decision flips inside a plausible range.

Illustrative application by the editorial desk. The source authors did not evaluate or endorse this procedure.