Musings on Markets

AUGUST 15, 2023

In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. What is a risk free investment? For an investment to be risk free then, it has to meet two conditions.

Investments 80

Investments Currencies Treasury Hurdle Rate 80

Musings on Markets

FEBRUARY 15, 2023

As I have argued in all four of my posts, so far, about 2022, it was year when we saw a return to normalcy on many fronts, as treasury rates reverted back to pre-2008 levels, and risk capital discovered that risk has a downside.

Profit and Loss 52

Profit and Loss Investments Hurdle Rate Accounting 52

Musings on Markets

JANUARY 9, 2021

To illustrate, consider a practice in valuation, where analysts are trained to add a small cap premium to discount rates for smaller companies, on the intuition that they are riskier than larger companies. As markets and companies have moved on, many of them no longer work, but investors continue to use them.

Valuation 52

Valuation Currencies Numbers Corporate Finance 52

Musings on Markets

JANUARY 27, 2021

In my last post , I described the wild ride that the price of risk took in 2020, with equity risk premiums and default spreads initially sky rocketing, as the virus led to global economic shutdowns, and then just as abruptly dropping back to pre-crisis levels over the course of the year. 06) and 10-year T.Bonds (-0.48).

Currencies 52

Currencies Investments Marketing Treasury 52

Musings on Markets

JANUARY 20, 2021

The failures of the signal have been variously attributed to low interest rates, accounting mis-measurement of earnings (especially at tech companies), and by some, to animal spirits. One explanation is that the bond market beliefs that the worst of the crisis is over and that default rates will return quickly to pre-COVID levels.

Treasury 52

Treasury Investments Valuation Hurdle Rate 52

Barry Ritholtz

NOVEMBER 8, 2022

His latest book could not be more timely, “The Price of Time: The Real Story of Interest,” it’s all about the history of interest rates, money lending, investing speculation, funded by banks and loans and credit. I’ve read the other stuff, Kindleberger got rate [ph] and that sort of stuff. There’s a shortage.

Valuation 57

Valuation Finance Investments Banking 57

CFO News Room

NOVEMBER 8, 2022

Because the economics of profitability start showing up particularly when you’re starting to hire other advisors and staff and team. ” look at the Monte Carlo simulations, look at what is the hurdle rate. So, last year, valuations were high, interest rates were low. Is it at 1.5%?”

Restructuring 130

Restructuring Planning Accounting Marketing 130