Valutico

FEBRUARY 27, 2024

The discount rate effectively encapsulates the risk associated with an investment; riskier investments attract a higher discount rate. Different types of discount rates such as risk-free rate, cost of equity, or cost of debt, are used contextually in financial analysis.

Discounted Cash Flow 52

Discounted Cash Flow Risk Premium Risk-free Rate Weighted Average Cost of Capital 52

Andrew Stolz

AUGUST 5, 2020

Definition of Capital Asset Pricing Model. It helps an investor understand what to expect to earn in relation to the risk-free rate and the market return. CAPM assumes that the minimum a rational investor would earn is the risk-free rate by buying the risk-free asset. beta of a stock).

Risk-free Rate 52

Risk-free Rate Beta Weighted Average Cost of Capital Risk Premium 52

Andrew Stolz

AUGUST 5, 2020

Definition of the Cost of Equity. To compensate for the risks that shareholders take, firms pay them in return. In other words, the cost of equity is the rate of returns a firm pays to its shareholders. Risk-free rate . The systematic risk of the security (Beta). The growth rate of dividends .

Equity 52

Equity Risk-free Rate Dividends Beta 52

Andrew Stolz

AUGUST 6, 2020

Definition of the Arbitrage Pricing Theory. It is a model based on the linear relationship between an asset’s expected risk and return. These variables include inflation , changes in interest rates, exchange rates, etc. Inflation rate: ß = 0.6, The risk-free rate is 5%. ER(x) = Rf + ??1

Risk-free Rate 52

Risk-free Rate Risk Premium Beta Marketability 52

Musings on Markets

FEBRUARY 10, 2021

What is a hurdle rate for a business? There are multiple definitions that you will see offered, from it being the cost of raising capital for that business to an opportunity cost , i.e., a return that you can make investing elsewhere, to a required return for investors in that business.

Risk-free Rate 52

Risk-free Rate Risk Premium Start-ups Equity 52

Brian DeChesare

AUGUST 31, 2022

But before delving into the best candidates for these roles, typical trades, careers, and more, let’s start with the basic definitions: What is a Convertible Arbitrage Hedge Fund? The risk-free rate is higher – because investors benefit from “delaying” their eventual purchase of the underlying shares when they earn higher interest elsewhere.

Banking 64

Banking Risk-free Rate Equity Start-ups 64

Musings on Markets

JANUARY 12, 2021

If it looks like I am over reaching, I start my corporate finance class with the simple proposition that any decision that involves money is a corporate finance decision, and by that definition everything that businesses do falls under its umbrella. The links to all of these classes are at the end of this post.

Corporate Finance 52

Corporate Finance Start-ups Finance Marketability 52