July 2009
Intermediate to advanced
600 pages
19h 50m
English
book
The Dark Side of Valuation: Valuing Young, Distressed, and Complex Businesses, Second Edition
by Aswath Damodaran
Content preview from The Dark Side of Valuation: Valuing Young, Distressed, and Complex Businesses, Second Edition
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Standard Approaches for Estimating Risk Premiums
How do analysts estimate the equity risk premium(s) and default spreads to use when doing valuation? The answer may vary across analysts, but we will focus on the most common approaches used to estimate the two measures.
Equity Risk Premiums
The most widely used approach to estimating equity risk premiums is the historical premium approach. The actual returns earned on stocks over a long time period are estimated and are compared to the actual returns earned on a default-free (usually government) security. The difference, on an annual basis, between the two returns is computed; it represents the historical risk premium. This section takes a closer look at this approach. While users of risk-and-return ...
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I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.