Remove Discounted Cash Flow Remove Market Risk Remove Specific Risk
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Discount Rate—Explanation, Definition and Examples

Valutico

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.

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Data Update 4 for 2021: The Hurdle Rate Question!

Musings on Markets

If you put all your money in one or the other of these companies, you are exposed to all these risks, but if you spread your bets across a dozen or more companies, you will find that company-specific risk gets averaged out.