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Session 4: More on risk free rates and first steps on equity risk premiums
Description
In this session, we started by continuing the risk free rate discussion, establishing why risk free rates vary across currencies and what to do (or not do) when risk free rates are very low or even negative. We started the discussion of equity risk premiums by looking at the flaws in historical risk premiums and how best to estimate country risk premiums and ended the class with an assessment of how to measure a company's exposure to country risk.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/risktest.pdf
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valfall16/valsession4.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session4soln.pdf
ERP by country: http://www.stern.nyu.edu/~adamodar/pc/datasets/ctrypremJuly16.xls
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