Musings on Markets

FEBRUARY 18, 2025

While I was working on my last two data updates for 2025, I got sidetracked, as I am wont to do, by two events.

Equity 52

Equity Book Value Marketability Start-ups 52

Musings on Markets

JANUARY 26, 2023

As I noted in my last post , rising risk free rates and equity risk premiums have pushed up the costs of equity for all companies, and Tesla is not only no exception but is perhaps even more exposed as an above-average risk company.

Start-ups 99

Start-ups Marketability Risk Premium Equity 99

Appraiser Newsroom

MAY 1, 2024

Understanding Property Insurance Basics Property insurance serves as a financial safety net for property owners in the event of property damage or total loss. Insurance industry terminology such as risk, premium, loss, deductibles, coverage limits, and perils are some of the fundamental concepts appraisers must grasp.

Appraisal 40

Appraisal Risk Premium Marketability 40

Musings on Markets

MAY 24, 2021

In the graph below, I look at the 10-year US T.Bond rate and the 10-year TIPs rate on a monthly basis, going back to the start of 2003, when TIPs started trading: The advantage of using interest rates to forecast inflation is that it not only is constantly updated to reflect real world events, but also because there is money riding on these bets.

Treasury 56

Treasury Start-ups Risk Premium Price to Book 56

Valutico

FEBRUARY 13, 2025

Therefore, recalculating beta periodically or when significant events occur is advisable for accurate risk assessment. Market Risk-Free Rate: Beta calculations often involve comparing the asset’s returns to a risk-free rate, such as the yield on a government bond with a similar maturity.

Beta 52

Beta Covariance Risk-free Rate Specific Risk 52

Equilest

MARCH 17, 2022

We note that the higher the expected rate (in other words, the greater the risk is perceived as necessary, to the point of requiring a substantial "risk premium"), the lower the multiple that will apply and therefore the lower valuation: we buy cheaper which is less safe. 11% per year. 10% per year. around 1.5%). -

Business Valuation 40

Business Valuation EBIT Discounted Cash Flow EBITDA 40

Appraiser Newsroom

JUNE 4, 2024

ASA International Conference is the leading event for the global valuation profession. He is a frequent presenter on valuation topics, and is currently a subject matter expert on the Appraisal Foundation’s working group preparing a Valuation Advisory on the Company-Specific Risk Premium.

Business Valuation 59

Business Valuation Intangible Assets Appraisal Finance 59

Musings on Markets

JANUARY 27, 2021

In my last post , I described the wild ride that the price of risk took in 2020, with equity risk premiums and default spreads initially sky rocketing, as the virus led to global economic shutdowns, and then just as abruptly dropping back to pre-crisis levels over the course of the year.

Start-ups 52

Start-ups Marketability Equity Treasury 52

Musings on Markets

JULY 25, 2023

It is true that a sovereign CDS spread gives you a more updated measure of default risk, since it is market-set, but as with all market-based measures, it comes with far more volatility and overshooting than a ratings-based spread, and it is available for only a subset of countries.

Risk Premium 52

Risk Premium Equity Start-ups Risk-free Rate 52

Musings on Markets

MARCH 19, 2022

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. to 25% for the Eurozone.

Start-ups 100

Start-ups Risk Premium Equity Market Capitalization 100

Musings on Markets

FEBRUARY 16, 2024

These are three very different stories, but what they share in common is a fear, imminent or expected, of a catastrophic event that may put a company's business at risk. Deconstructing Risk While we may use statistical measures like volatility or correlation to measure risk in practice, risk is not a statistical abstraction.

Risk Premium 78

Risk Premium Start-ups Beta Marketability 78

Musings on Markets

MARCH 28, 2022

Risk Surge and Economic Viability : In my last post, I noted the surge in Russia's default spread and country risk premium, making it one of the riskiest parts of the world to operate in, for any business. On a different note, the events of the recent weeks have also pointed to the elasticity of the ESG concept.

Start-ups 119

Start-ups Alpha Marketability Risk Premium 119

Musings on Markets

JULY 24, 2024

After the 2008 market crisis, I resolved that I would be far more organized in my assessments and updating of equity risk premiums, in the United States and abroad, as I looked at the damage that can be inflicted on intrinsic value by significant shifts in risk premiums, i.e., my definition of a crisis.

Risk Premium 78

Risk Premium Equity Start-ups EBITDA 78

Musings on Markets

JANUARY 28, 2025

Clearly, this is simplistic, since you can have unusual events during a year that cause inflation in that year to spike. (In In fact, in the graph below, I compare the price of risk in both the equity and bond markets across time: In most years, equity risk premiums and bond default spreads move in the same direction, as was the case in 2024.

Banking 71

Banking Treasury Risk Premium Start-ups 71

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] 2] [15] [17].

Discounted Cash Flow 52

Discounted Cash Flow Marketability Risk Premium Start-ups 52