Andrew Stolz

MARCH 20, 2020

The formula implies the return an investor expects from a risk-free investment plus the return from the stock in relation to market volatility. The market risk premium is calculated from a market rate of return less a risk-free rate. Suitability and limitation.

Beta 52

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

Andrew Stolz

JANUARY 28, 2022

Attractive dividend yield could rise to 2x Japanese average. Attractive dividend yield could rise to 2x Japanese average. In the past share, the company has increased its dividend per share and is likely to maintain that level. This could result in a massive dividend yield of 5%+ (Japanese average is 2.5%). Conclusions.

Dividends 52

Dividends Risk-free Rate Net Debt Equity 52

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.

Start-ups 101

Start-ups Dividends Marketability Market Capitalization 101

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 52

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

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 52

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

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 52

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

Musings on Markets

FEBRUARY 8, 2022

In my last two posts, I noted that the prices of risk have drifted down in markets, with both equity risk premiums and default spreads decreasing through 2021. Hurdle Rate Delusions The two biggest forces that drive corporate financial and investor decision making are me-too-ism and inertia.

Risk Premium 90

Risk Premium Beta Start-ups Equity 90

Valutico

FEBRUARY 13, 2025

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. Ensure that you have access to accurate and up-to-date data for the chosen benchmark index.

Beta 52

Beta Covariance Risk-free Rate Specific Risk 52

Musings on Markets

MAY 6, 2022

Earnings Estimates : The strength of the economy has been a big contributor to boosting actual and expected earnings on companies in the last two years, and these higher earnings have translated into more cash returned in dividends and buybacks.

Risk Premium 102

Risk Premium Treasury Start-ups Equity 102

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 98

Risk Premium Risk-free Rate Start-ups Equity 98

Musings on Markets

JANUARY 12, 2021

Thus, you and I can disagree about whether beta is a good measure of risk, but not on the principle that no matter what definition of risk you ultimately choose, riskier investments need higher hurdles than safer investments.

Corporate Finance 52

Corporate Finance Start-ups Finance 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 80

Equity Book Value Start-ups Corporate Finance 80

Musings on Markets

JANUARY 8, 2022

The consensus can be wrong : A few months ago, I made the mistake of watching Moneyheist, a show on Netflix, based upon its high audience ratings on Rotten Tomatoes , and as I wasted hours on this abysmal show, I got a reminder that crowds can be wrong, and sometimes woefully so.

Risk Premium 99

Risk Premium Start-ups Market Capitalization Corporate Finance 99

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. Dividends and Potential Dividends (FCFE) 1. Equity Risk Premiums 2.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Musings on Markets

JANUARY 28, 2024

That may sound like a corporate finance abstraction, but the cost of capital is a pivotal number that can alter whether and how much companies invest, as well as in what they invest, how they fund their investments (debt or equity) and how much they return to owners as dividends or buybacks.

Risk Premium 117

Risk Premium Beta Start-ups Equity 117

Musings on Markets

JANUARY 17, 2025

In the graph below, I look at returns (inclusive of dividends) on the S&P 500 every year from 1928 to 2024. Historical Context To assess stock returns in 2024, it makes sense to step back and put the year's performance into historical perspective.

Equity 126

Equity Risk Premium Treasury Start-ups 126