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? Why does the risk-free rate matter?
ThomsonReuters
MAY 6, 2021
The Codification often provides guidance on how to select a discount rate for a particular area of accounting. The Codification may require the use of a risk-free rate in some places and a risk-adjusted rate in others. Recent events have also impacted the components of the discount rate.
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Musings on Markets
JANUARY 21, 2023
It is the nature of stocks that you have good years and bad ones, and much as we like to forget about the latter during market booms, they recur at regular intervals, if for no other reason than to remind us that risk is not an abstraction, and that stocks don't always win, even in the long term. at the start of that year.
Musings on Markets
JANUARY 30, 2023
US Treasuries: Risk and Time Horizon In classrooms and in wealth managers’ offices, it has been standard practice to push US treasuries and highly rated corporate bonds as safe, and even with price changes factored in, as a portfolio stabilizer, with a mix of stocks and bonds forming a “balanced” portfolio.
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.
Musings on Markets
FEBRUARY 8, 2022
Geographical Risk Beta measure the macro risk exposure of the businesses that a company operates in, but they are blunt instruments, incapable of capturing either country risk (from operating in the riskiest parts of the world) or discrete risk (from default, nationalization or other events that truncate a company's life).
Musings on Markets
SEPTEMBER 20, 2024
Overall, though, and this is my view, this was about as anticlimactic as a climactic event gets, akin to watching an elephant in labor deliver a mouse. 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.
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