Musings on Markets

JANUARY 8, 2022

Regional Breakdown My data sample for 2022 includes every publicly traded firm that is traded anywhere in the world, with a market capitalization that exceeds zero. For debt markets, it takes the form of default spreads, and I report the latest estimates of these corporate bond spreads at this link.

Risk Premium 93

Risk Premium Start-ups Market Capitalization Corporate Finance 93

Appraisal Rights

JUNE 5, 2017

In selecting the appropriate equity risk premium, the court observed that whether to use supply-side or historical ERP should be determined on a case-by-case basis.

Beta 40

Beta Risk Premium Capital Structure Discounted Cash Flow 40

Musings on Markets

JANUARY 27, 2022

Corporate Bonds: No Shortage of Risk Capital In my last post, I chronicled the movement in the equity risk premium, i.e. the price of risk in the equity market, during 2021, but the bond market has its own, and more measurable, price of risk in the form of corporate default spreads.

Risk-free Rate 87

Risk-free Rate Treasury Price to Book Start-ups 87

Musings on Markets

FEBRUARY 2, 2023

Finally, my starting cost of capital of 10.15% reflects the reality that the riskfree rate and equity risk premiums have risen over 2022, and my ending number of 9% is an indication that I expect Tesla to become less risky over time. It was the reason that I argued at a $1.2

Start-ups 99

Start-ups Risk-free Rate Market Capitalization Risk Premium 99

Musings on Markets

JANUARY 5, 2024

Since I am lucky enough to have access to databases that carry data on all publicly traded stocks, I choose all publicly traded companies, with a market price that exceeds zero, as my universe, for computing all statistics. Beta & Risk 1. Equity Risk Premiums 2. Return on (invested) capital 2. Debt Details 1.

Dividends 100

Dividends Risk Premium Equity Book Value 100

Musings on Markets

JANUARY 6, 2023

When valuing or analyzing a company, I find myself looking for and using macro data (risk premiums, default spreads, tax rates) and industry-level data on profitability, risk and leverage. Data universe : In my sample, I include all publicly traded firms with market capitalizations that exceed zero, traded anywhere in the world.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 52

Musings on Markets

MARCH 25, 2021

Risk premiums No effect or even a decrease. Risk premia may rise as inflation increases, because higher inflation is almost always more volatile than low inflation. In January, the NASDAQ continued its 2020 success, and the S&P 500 lagged, losing value. Riskfree rate will rise.

Equity 52

Equity Risk-free Rate Treasury Start-ups 52

Musings on Markets

JANUARY 9, 2021

While the universe of companies is diverse, with approximately half of all firms from emerging markets, it is more concentrated in market capitalization, with the US accounting for 40% of global market capitalization at the start of the year.

Risk Premium 52

Risk Premium Market Capitalization Equity Start-ups 52

Musings on Markets

FEBRUARY 27, 2023

In this section, I will lay out a mechanism for evaluating the effects of borrowing on the cost of funding a business, i.e., the cost of capital, and talk about why firms may under or overshoot this optimal.

Equity 52

Equity EBITDA Start-ups Net Debt 52