Musings on Markets

JANUARY 30, 2023

If 2022 was an unsettling year for equities, as I noted in my second data post, it was an even more tumultuous year for the bond market. The rise in rates transmitted to corporate bond market rates, with a concurrent rise in default spreads exacerbating the damage to investors.

Treasury 74

Treasury Start-ups Risk Premium Equity 74

Musings on Markets

AUGUST 5, 2023

If you have been reading my posts, you know that I have an obsession with equity risk premiums, which I believe lie at the center of almost every substantive debate in markets and investing. How, you may ask, can equity risk premiums be that divergent, and does that imply that anything goes?

Risk Premium 78

Risk Premium Equity Start-ups Treasury 78

Musings on Markets

JANUARY 8, 2022

The consensus can be wrong : A few months ago, I made the mistake of watching Moneyheist, a show on Netflix, based upon its high audience ratings on Rotten Tomatoes , and as I wasted hours on this abysmal show, I got a reminder that crowds can be wrong, and sometimes woefully so.

Risk Premium 91

Risk Premium Start-ups Market Capitalization Corporate Finance 91

Musings on Markets

JANUARY 12, 2021

Corporate Finance : Corporate finance is the development of the first financial principles that govern how to run a business. It is that mission that makes corporate finance the ultimate big picture class, one that everyone (entrepreneurs, investors, analysts, business observers) should take.

Corporate Finance 52

Corporate Finance Start-ups Finance Marketability 52

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

Musings on Markets

JANUARY 5, 2024

In my corporate finance class, I describe all decisions that companies make as falling into one of three buckets – investing decisions, financing decision and dividend decisions. Beta & Risk 1. Return on Equity 1. Equity Risk Premiums 2. Ratings & Spreads 2. Tax rates 4.

Dividends 98

Dividends Risk Premium Equity Book Value 98

Musings on Markets

FEBRUARY 8, 2022

The other is the dangerous notion that measuring risk is the same as managing that risk and, in some cases, the even more insane view that it removes that risk. In corporate finance, this takes the form of a hurdle rate , a minimum acceptable return on an investment, for it to be funded.

Risk Premium 67

Risk Premium Beta Start-ups Equity 67

Appraisal Rights

AUGUST 8, 2017

In addition, the Supreme Court disagreed with chancery that a financial buyer – such as Lone Star, the private equity buyer here – would perform a valuation analysis that was necessarily lower than that done by a strategic buyer. The Supreme Court Rejected the Cross-Appeal and Refused to Disregard the Comparable Companies Analysis.

Discounted Cash Flow 40

Discounted Cash Flow Comparable Company Analysis Risk-free Rate Appraisal 40