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The overriding message in all of this data is that Russia/Ukraine war has unleashed fears in the bond market, and once unleashed that fear has pushed up worries about default and default risk premia across the board.
An Optimizing Tool In my second and third data posts for this year, I chronicled the effects of rising interest rates and riskpremiums on costs of equity and capital. In computing the latter, I used the current debt ratios for firms, but made no attempt to evaluate whether these mixes were "right" or not.
Instead, you will have to revalue the company, with adjustments to expected cash flows and riskpremiums, given the crisis, and if that value exceeds the price, you should buy the stock. Contrarian Investing: The Psychological Tests! In the abstract, it is easy to understand the appeal of contrarian investing.
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