Value Investing, Videos

Aswath Damodaran – Session 6 (MBA): Risk free Rates and Equity Risk Premiums

Aswath Damodaran Session 6 (MBA): Risk free Rates and Equity Risk Premiums

 

Published on Feb 22, 2016

We started today’s class by tying up the last loose ends with risk free rates: how to estimate the risk free rate in a currency where there is no default free entity issuing bonds in that currency and why risk free rates vary across currencies. The rest of today’s class was spent talking about equity risk premiums. The key theme to take away is that equity risk premiums don’t come from models or history but from our guts. When we (as investors) feel scared or hopeful about everything that is going on around us, the equity risk premium is the receptacle for those fears and hopes. Thus, a good measure of equity risk premium should be dynamic and forward looking. We looked at three different ways of estimating the equity risk premium.
Slides: http://www.stern.nyu.edu/~adamodar/po…
Post class test: http://www.stern.nyu.edu/~adamodar/pd…
Post class test solution: http://www.stern.nyu.edu/~adamodar/pd…


Screenshot_360

Get our newsletter and our in-depth investor case studies all for free!