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? How Do You Calculate Equity Risk Premium? Why is the Equity Risk Premium Important?

Risk Premium 52

Risk Premium Equity Risk-free Rate Dividends 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. The theoretical return the firm pays its equity investors (shareholders) is known as the cost of equity. In other words, the cost of equity is the rate of returns a firm pays to its shareholders.

Equity 52

Equity Risk-free Rate Dividends Beta 52

Brian DeChesare

AUGUST 31, 2022

Convertible bonds are hybrid instruments with elements of debt and equity, and some groups that trade convertible bonds also combine elements of S&T and IB. If you’re using a strategy like long/short equity , you could long or short a company’s stock, and your results would depend heavily on the stock market’s overall direction.

Banking 89

Banking Risk-free Rate Equity Start-ups 89

IVSC

JUNE 12, 2023

She was also a contributing author to the chapter "Risk-Free Rate" in the fifth edition. She has advised numerous companies on valuations for the purposes of financial reporting, transaction, restructuring, taxation, dispute resolution and financing.

Risk-free Rate 130

Risk-free Rate Intangible Assets Appraisal Business Valuation 130

Andrew Stolz

AUGUST 5, 2020

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. How Do You Calculate the Capital Asset Pricing Model? E(r) = Rf + ??(Rm

Risk-free Rate 52

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

Musings on Markets

OCTOBER 4, 2023

Some of these differences across sectors reflect reversals from the damage done in 2022, but some of it is reflective of the disparate impact of inflation and higher rates across companies Finally. trillion increase in value US equities, the seven companies that we listed earlier accounted for $3.7

Marketability 123

Marketability Start-ups Risk Premium Treasury 123

Brian DeChesare

FEBRUARY 28, 2024

While everyone seems to know about equity research and trading stocks, fixed income research gets far less attention. Equity Research vs. Fixed Income Research Common Myths What Do You Do as a Fixed Income Research Analyst or Associate? a credit rating vs. an investment recommendation). closer to the work at a quant fund ).

Equity 59

Equity Banking Start-ups Risk-free Rate 59

Musings on Markets

FEBRUARY 8, 2022

In this post, I will start with a working definition of riskt that we can get some degree of agreement about, and then look at multiple measures of risk, both at the company and country level. In closing, I will talk about some of the more dangerous delusions that undercut good risk taking. What is risk?

Risk Premium 95

Risk Premium Beta Start-ups Equity 95

Equilest

JULY 31, 2022

What is Beta in Finance, and why is it essential for a business valuation? Are you considering evaluating a business using an excel template without understanding Beta in Finance? In Finance - the beta represents how sensitive the stock price is concerning the market price change (index). Think again!

Beta 40

Beta Business Valuation Finance Discounted Cash Flow 40

Musings on Markets

JANUARY 5, 2024

I have also developed a practice in the last decade of spending much of January exploring what the data tells us, and does not tell us, about the investing, financing and dividend choices that companies made during the most recent year. Beta & Risk 1. Return on Equity 1. Equity Risk Premiums 2. Tax rates 4.

Dividends 106

Dividends Risk Premium Equity Book Value 106

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 98

Treasury Start-ups Risk Premium Equity 98

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 Beta 52

Valutico

APRIL 17, 2023

Determining a company’s “Cost of Capital” is vital in corporate finance and valuation, and the Weighted Average Cost of Capital (WACC) provides a specific way of doing so. These costs are then combined into a “weighted average” which represents the overall cost of financing a business.

Weighted Average Cost of Capital 52

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

Valutico

APRIL 17, 2023

Determining a company’s “Cost of Capital” is vital in corporate finance and valuation, and the Weighted Average Cost of Capital (WACC) provides a specific way of doing so. These costs are then combined into a “weighted average” which represents the overall cost of financing a business.

Weighted Average Cost of Capital 52

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

Valutico

APRIL 12, 2023

Determining a company’s “Cost of Capital” is vital in corporate finance and valuation, and the Weighted Average Cost of Capital (WACC) provides a specific way of doing so. These costs are then combined into a “weighted average” which represents the overall cost of financing a business.

Weighted Average Cost of Capital 52

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

Andrew Stolz

AUGUST 6, 2020

The expected return on an asset is determined by the risk-free rate of return with the addition of the asset’s beta to each macroeconomic factor that impacts the return on the asset multiplied by the risk premium of those factors. Inflation rate: ß = 0.6, The risk-free rate is 5%. 1 + RP1 + ??2+

Risk-free Rate 52

Risk-free Rate Risk Premium Beta 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 82

Equity Book Value Start-ups Corporate Finance 82

Musings on Markets

NOVEMBER 9, 2021

In this post , I argued that one of the key dividing lines between the two groups was flexibility , with companies with more flexible investing, financing and dividend policies winning out over companies with more rigidity on those dimensions. for mature markets. What’s your story?

Start-ups 101

Start-ups Dividends Marketability Market Capitalization 101

Musings on Markets

JANUARY 24, 2024

In my last post, I looked at equities in 2023, and argued that while they did well during 2023, the bounce back were uneven, with a few big winning companies and sectors, and a significant number of companies not partaking in the recovery.

Treasury 52

Treasury Risk Premium Start-ups Risk-free Rate 52

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. Of course, but with two caveats.

Corporate Finance 52

Corporate Finance Start-ups Finance Marketability 52

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 Going Concern Value 40

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.

Risk Premium 99

Risk Premium Risk-free Rate Start-ups Equity 99

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. What is risk?

Risk Premium 123

Risk Premium Beta Start-ups Equity 123

Musings on Markets

JANUARY 8, 2022

That said, it is my experience with markets that has also made me skeptical about the over selling of both notions, since we have an entire branch of finance (behavioral finance/economics) that has developed to explain how more data does not always lead to better decisions and why crowds can often be collectively wrong.

Risk Premium 99

Risk Premium Start-ups Market Capitalization Corporate Finance 99

Equidam

APRIL 22, 2025

Venture Capital (VC) Financing: This is perhaps the most common context. It determines the price per share, dictating how much equity founders concede in exchange for the capital raised. [3] 23] Equidam uses country-specific risk-free rates (10-year government bonds) and market risk premiums (sourced from Damodaran). [23]

Discounted Cash Flow 64

Discounted Cash Flow Terminal Value Marketability EBITDA 64

Equidam

APRIL 22, 2025

2] Startups typically lack significant historical financial data, often operate with negative profits initially, rely heavily on private equity or venture capital rather than traditional bank loans, and face a much higher risk of failure. [1] This premium rises when perceived market risk increases. [27] Equidam Blog).

Discounted Cash Flow 52

Discounted Cash Flow Marketability Risk Premium Start-ups 52