Valutico

FEBRUARY 27, 2024

More importantly, we’ll dig deeper into how discount rates can influence investment choices and how they’re used to figure out a company’s worth. What is a discount rate? The “discount rate” does two main things. For central banks like the Federal Reserve, it helps control the economy.

Discounted Cash Flow 52

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

Musings on Markets

JULY 13, 2022

Country Risk: Equity Risk For equity investors, the price of risk is captured by the equity risk premium, and equity risk premiums will vary across countries. Please do not attach any political significance to my country groupings, or take them personally.

Risk Premium 81

Risk Premium Risk-free Rate Start-ups Equity 81

Andrew Stolz

MARCH 20, 2020

A firm borrows from banks or bondholders and it has to pay the interest. The formula implies the return an investor expects from a risk-free investment plus the return from the stock in relation to market volatility. The market risk premium is calculated from a market rate of return less a risk-free rate.

Beta 52

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

Brian DeChesare

MAY 3, 2023

But people who aim for investment banking roles are very much into those bells and whistles, so questions about the DDM and other “exotic” methodologies began rolling in. To be fair, in some industries – like commercial banks and insurance within FIG – the DDM is a core valuation methodology.

Dividends 64

Dividends Terminal Value Enterprise Value Equity 64

Musings on Markets

JANUARY 31, 2024

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.

Equity 79

Equity Book Value Start-ups Corporate Finance 79