The Impact of a One Factor Model on Risk Level of Viet Nam Medicine Industry

This research paper evaluates the impacts of external financing (one factor model) on market risk for
the listed firms in the Viet nam medical industry as it becomes necessary, esp. after the financial crisis
2007-2009.
First, by using quantitative and analytical methods to estimate asset and equity beta of total 10 listed
companies in Viet Nam medical industry with a proper traditional model, we found out that the beta
values, in general, for many institutions are acceptable.
Second, under 3 different scenarios of changing leverage (in 2011 financial reports, 30% up and 20%
down), we recognized that the risk level, measured by equity and asset beta mean, decreases when
leverage increases to 30% and it increases in case leverage down to 20%.
Third, by changing leverage in 3 scenarios, we recognized the dispersion of risk level, measured by
equity beta var, increases if the leverage increases to 30%. Compared to the results of other
industries, we see that asset beta var in here increases when leverage up to 30% as well as that in
consumer good industry.
Finally, this paper provides some outcomes that could provide companies and government more
evidence in establishing their policies in governance.