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.

Risk Premium 98

Risk Premium Equity Start-ups Treasury 98

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

Musings on Markets

AUGUST 15, 2023

In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. What is a risk free investment? What is a risk free investment?

Risk-free Rate 98

Risk-free Rate Risk Premium Treasury Start-ups 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

Andrew Stolz

AUGUST 5, 2020

Definition of Capital Asset Pricing Model. 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. E(r) = Rf + ??(Rm

Risk-free Rate 52

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

Andrew Stolz

AUGUST 6, 2020

Definition of the Arbitrage Pricing Theory. It is a model based on the linear relationship between an asset’s expected risk and return. These variables include inflation , changes in interest rates, exchange rates, etc. Inflation rate: ß = 0.6, The risk-free rate is 5%. ER(x) = Rf + ??1

Risk-free Rate 52

Risk-free Rate Risk Premium Beta Marketability 52

Musings on Markets

FEBRUARY 8, 2022

Investors all talk about risk, but there seems to be little consensus on what it is, how it should be measured, and how it plays out in the short and long term. In closing, I will talk about some of the more dangerous delusions that undercut good risk taking.

Risk Premium 95

Risk Premium Beta Start-ups Equity 95