Session 5 (Val MBAs): Closure on Riskfree Rates and First Steps on Equity Risk Premiums 

In this session, we started by doing a brief test on country risk premiums. We started with an assessment of historical equity risk premiums, and why they are not good predictors of future equity risk premiums, before embarking on a discussion of country risk and how to deal with it, and measure it. We also looked at company risk exposure to country risk, with my core argument being that a company’s exposure to country risk comes from where it dos business, not where it is incorporated: After a brief foray into lambda, a more composite way of measuring country risk, we ended the session by talking about how you can estimate a forward-looking, dynamic equity risk premium.
Start of the class test: pages.stern.ny...
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Post class test:
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Post class test solution: pages.stern.ny...