Country default spreads and risk premiums 2016
Aswath Damodarans Blog, page 8
Country Default Spreads and Risk Premiums
While you can use these numbers as rough estimates of country risk premiums, you may want to modify the premia to reflect the additonal risk of equity markets. To estimate the long term country equity risk premium, I start with a default spread, which I obtain in one of two ways: 1 I use the local currency sovereign rating from Moody's: www. That difference becomes the country spread. You can add just this default spread to the mature market premium to arrive at the total equity risk premium. I add an additional step.
One of the consequences of globalization is that investors, analysts and companies can no longer stay focused on just their domestic markets, but have to also understand the risks and opportunities elsewhere in the world.
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Such great content should be shared. Could you please add a "shareit" plugin or similar so we can get the word out more to our communities? Thank you, Jeff. Just with one look on the map: Netherlands are an outlier. The market cannot be that cheap or are these zoombie banks and insurers? Very timely given the chatter about Aramco of Saudi Arabia possibly looking to sell a minority stake to the public.