Daily Learning Logs

Comprehensive Income

Comprehensive Income = Net Income + Other Comprehensive Income (OCI). OCI shows changes that comes from unrealized gains/losses like currency translation changes, investments, and pension and postretirement medical plan adjustments. These changes go directly to equity and don’t affect earnings per share.

Predicted Beta

Predicted Beta shows how sensitive a stock is to market movements. Historical beta looks at the past. Predicted beta adjusts it toward 1.0, because betas tend to move closer to 1.0 over time. Formula: Adjusted Beta = (2/3 × Historical Beta) + (1/3 × 1.0). It is used in CAPM when calculing cost of equity for WACC. Don’t use historical beta when you calculate WACC, always use predicted beta.