Explain how the equity risk premium influences beta which influences k-wacc. Please use this YouTube video

(https://www.youtube.com/watch?v=WQGozLy04iM&feature=youtu.be) and FT ArticleInvestors want companies to lift capital spending-survey (attached below) as a reference.

 

Investors want companies to lift capital spending - survey

AUGUST 16, 2016

by:Adam Samson, Financial Times

Returning money to shareholders has been a popular way for companies to appease investors and lift stock prices in a low-growth world but fund managers would like to see groups increase their capital spending, a new survey shows.

Fifty-six per cent of global fund managers queried in August as part of a Bank of America Merrill Lynch survey want groups to increase capital spending, up from 46 per cent just four months ago. Inversely, 21 per cent of managers would like companies to return money to shareholders, down by three percentage points from July.

At the same time, a "near record" 69 per cent of managers believe corporates around the globe are under-investing, according to the survey that includes 173 participants with $518bn in assets under management.

The shifting sentiment is significant since buybacks and dividends have been cited by market strategists as one of the key pillars in the global rise in developed-market equity prices this year even as economic growth remains tepid.

On the other hand, corporate managers have been reluctant to direct cash-flow toward large investments given the slow pace of the recovery from the global financial crisis. In addition, the fall in the crude oil price has pressured capital spending among energy groups, which had been an important bright spot.

The yearn for higher investment comes as fund managers also grow more optimistic about corporate profitability: a net 11 per cent of investors think global profits will improve over the next year, up from just 4 per cent in July.

Answer rating: 100% (QA)

The equity risk premium beta and the weighted average cost of capital kWACC are all interconnected concepts in finance The equity risk premium refers ... View the full answer