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. What is a discount rate?

Discounted Cash Flow

Valutico

FEBRUARY 13, 2025

In the world of finance and investing, the concept of beta plays a vital role in assessing an investment’s risk and volatility. Whether you’re a seasoned investor or new to the market, understanding beta can empower you to make informed decisions. For example, a beta of 1.5 suggests dampened price movements, around 0.8%

Beta

Equilest

JANUARY 3, 2023

In this blog post, we will explore the key principles of the APT and provide a comprehensive guide on how to use it to make informed investment decisions. Arbitrage Pricing Theory (APT) is a financial model that describes how the price of an asset is determined by a number of factors or "risk factors." x 5%) + (0.2 x 4%) + (0.1

Risk Premium

Valutico

APRIL 17, 2023

The WACC formula derives the current cost of each form of finance, starting with the risk-free rate, the expected return on equity, and the costs associated with debt financing. The required rate of return for equity (Re) is generally calculated using the Capital Asset Pricing Model (CAPM).

Weighted Average Cost of Capital

Valutico

APRIL 17, 2023

The WACC formula derives the current cost of each form of finance, starting with the risk-free rate, the expected return on equity, and the costs associated with debt financing. The required rate of return for equity (Re) is generally calculated using the Capital Asset Pricing Model (CAPM).

Weighted Average Cost of Capital

Valutico

APRIL 12, 2023

The WACC formula derives the current cost of each form of finance, starting with the risk-free rate, the expected return on equity, and the costs associated with debt financing. The required rate of return for equity (Re) is generally calculated using the Capital Asset Pricing Model (CAPM).

Weighted Average Cost of Capital

Valutico

DECEMBER 12, 2023

Efficient and comprehensive searches are fundamental to informed decision-making. We’ve added a ‘date picker’ across key resources sections, allowing you to examine risk-free rates, corporate tax rates, market risk premium, and country ratings across any historic date you select.

Risk-free Rate

Andrew Stolz

JANUARY 28, 2022

Historically, Japan has a very low risk-free rate. DISCLAIMER: This content is for information purposes only. While the information provided is believed to be accurate, it may include errors or inaccuracies. However, my long-term outlook is a bit more optimistic. Download the full report as a PDF.

Dividends

Musings on Markets

SEPTEMBER 20, 2024

The answer is recognizing that market-set rates ultimately are composed of two elements: an expected inflation rate and an expected real interest rate , reflecting real economic growth.

Banking

Andrew Stolz

JANUARY 28, 2022

Russia has a massively high risk-free rate of 10%. DISCLAIMER: This content is for information purposes only. While the information provided is believed to be accurate, it may include errors or inaccuracies. FCFF likely to remain volatile given abrupt changes in working capital. Value estimate – Gazprom.

Risk-free Rate

Musings on Markets

JANUARY 5, 2024

The numbers that I computed opened my eyes to how much perspective on the high, low, and typical values, i.e., the distribution of margins, helped in valuing the company, and how little information there was available, at least at that time, on this dimension. will reflect the most recent quarterly accounting filing.

Dividends

Appraisal Rights

AUGUST 8, 2017

The Court found that market prices may generally be superior to other valuation techniques where they reflect the collective judgment of many persons who were incorporating publicly available information, as opposed to a single person’s performing his own valuation model, such as a discounted cash flow analysis.

Discounted Cash Flow

ThomsonReuters

JUNE 15, 2021

Additionally, private companies have options in a few areas—most notably use of IBR or risk-free rate–that public companies do not,” she said. Topic 280, Segment Reportin g , is a topic target private companies have to mindful of because the rules are unique to public companies.

Risk-free Rate

Musings on Markets

JANUARY 24, 2024

Other Currencies The rise in interest rates that I chronicled for the United States played out in other currencies, as well. Note also that during 2022 and 2023, the movements in these government bond rates mimic the US treasuries, rising strongly in 2022 and declining or staying stable in 2023.

Treasury

Brian DeChesare

MAY 3, 2023

Dividend Discount Model, Part 4: Present Value of Terminal Value and Dividends Since the Dividend Discount Model is based on Equity Value, not Enterprise Value, the Discount Rate is the Cost of Equity: Risk-Free Rate + Equity Risk Premium * Levered Beta.

Dividends

Valutico

OCTOBER 20, 2022

Rf = Risk-free Rate. Rm – Rf) = Equity Market Risk Premium. Value a company’s stock price to compare it to the actual stock price, as one piece of information to help you decide whether to invest. Now, we need to calculate the discount rate. . Risk free rate (can use 10y Treasury).

Discounted Cash Flow

Brian DeChesare

FEBRUARY 28, 2024

Rates: Is the “risk-free rate” truly risk-free ? Rate Changes: If interest rates are set to rise over the next year, how would you structure your portfolio? What might cause a bond’s price to change? Bond Math: How can you approximate the Yield to Maturity? What does duration mean intuitively?

Equity

Musings on Markets

JANUARY 12, 2021

In this class, I try (and that is all I can do) to provide a full menu of investment philosophies, starting with technical analysis/charting, moving on to value and growth investing (in both public and private forms), and then on trading on public or private information.

Corporate Finance

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).

Risk Premium

Musings on Markets

MARCH 25, 2021

for the year are at war with its concurrent promise to keep rates low; after all, adding those numbers up yields a intrinsic risk free rate of 8.7%. The Stocks Story As treasury rates have risen in 2021, equity markets have been surprisingly resilient, with stocks up during the first three months.

Equity

Musings on Markets

JANUARY 8, 2022

In the last decade, as tech companies have expanded their reach into our personal lives, collecting information on choices and decisions that used to private, big data has become not just a buzzword, but also a justification for investing billions in companies/projects that have no discernible pathway to profitability, but offer access to data.

Risk Premium

Musings on Markets

JANUARY 28, 2024

That is understandable, but digger deeper into the data and doing more analysis will lead to better estimates, only if the risk that you are looking at is estimation risk.

Risk Premium

Musings on Markets

JULY 27, 2022

The effects of inflation show up first as higher risk free rates , across currencies, and next in higher risk premiums, with both equity risk premiums and default spreads rising. An Action Plan So, what now?

Risk Premium

Equidam

MAY 14, 2025

This calibration directly impacts expected returns, required ROI, survival rates, and appropriate liquidity discounts, significantly refining risk assessment. Country: Argentina Operating from Argentina influences extrinsic risk factors due to regional economic conditions, market size, regulatory environment, and currency stability.

Risk Premium

Musings on Markets

JANUARY 17, 2025

Thus, if are using the average equity risk premium for the last 97 years of 5.44% (7.00%), i.e., the arithmetic or geometric averages, it behooves you to also inform users that the standard error of 2.12% will create a range of about 4% on either side of the estimate.

Equity

Musings on Markets

JANUARY 28, 2025

Thus, an unexpected increase in the Fed Funds rate may signal that the Fed sees higher inflation than the market perceives at the moment, and a big drop in the Fed Funds rates may indicate that it sees the economy weakening at a time when the market may be unaware. Data Update 4 for 2025: Interest Rates, Inflation and Central Banks!

Banking

Equidam

APRIL 22, 2025

3] , [6] For the startup itself, valuation informs strategic planning, facilitates goal-setting, aids in resource allocation, and provides a benchmark for measuring progress. [3] 11] , [1] , [2] They provide a structured, reasoned opinion on value to inform the negotiation that ultimately determines the price. [18]

Discounted Cash Flow

Equidam

APRIL 22, 2025

This de-risks the market adoption aspect. Essentially, all verifiable information about the company’s present serves to build credibility and reduce the perceived risk associated with achieving the projected future state. This premium rises when perceived market risk increases. [27]

Discounted Cash Flow