Dividends Equity Risk Premium Risk-free Rate 
Andrew Stolz
AUGUST 4, 2020
Definition of Equity Risk Premium. It is the difference between expected returns from the stock market and the expected returns from risk-free investments. What Impacts the Equity Risk Premium? Dividends . How Do You Calculate Equity Risk Premium? Dividend model ?
Brian DeChesare
MAY 3, 2023
When I started offering financial modeling training , I never expected to get questions about a methodology like the Dividend Discount Model (DDM). Otherwise, the written version follows: Why Use a Dividend Discount Model? The main argument in favor of the DDM is that it best represents what happens in real life when you buy a stock.
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Musings on Markets
JANUARY 19, 2022
In a post at the start of 2021 , I argued that while stocks entered the year at elevated levels, especially on historic metrics (such as PE ratios), they were priced to deliver reasonable returns, relative to very low risk free rates (with the treasury bond rate at 0.93% at the start of 2021). The year that was.
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. That said, I don't blame you, if are confused not only about how I estimate this premium, but what it measures.
Musings on Markets
JANUARY 28, 2024
In my last data updates for this year, I looked first at how equity markets rebounded in 2023 , driven by a stronger-than-expected economy and inflation coming down, and then at how interest rates mirrored this rebound.
Andrew Stolz
MARCH 20, 2020
A firm uses a mix of equity and debt to minimize the cost of capital. In general, the cost of debt is lower than the cost of equity due to the tax advantage of debt. The cost of capital also reflects the riskiness of a firm which reflects the required rate of return. WACC is also viewed as appropriate for a discount rate.
Musings on Markets
MAY 6, 2022
Investment Consequences As the storm clouds of higher inflation and interest rates, in conjunction with slower or even negative economic growth, gather, it should come as no surprise that equity markets are struggling to find their footing. At the close of trading on May 5, 2022, the S&P 500 stood at 4147, down 13.3%
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