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Data Update 4 for 2021: The Hurdle Rate Question!

Musings on Markets

What is a hurdle rate for a business? In this post, I will start by looking at the role that hurdle rates play in running a business, with the consequences of setting them too high or too low, and then look at the fundamentals that should cause hurdle rates to vary across companies. What is a hurdle rate?

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Data Update 4 for 2024: Danger and Opportunity - Bringing Risk into the Equation!

Musings on Markets

In particular, there are wide variations in how risk is measured, and once measured, across companies and countries, and those variations can lead to differences in expected returns and hurdle rates, central to both corporate finance and investing judgments.

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Musings on Markets: Data Update 5 for 2022: The Bottom Line!

CFO News Room

The question of whether a company is making or losing money should be a simple one to answer, especially in an age where accounting statements are governed by a myriad of rules, and a legion of number-crunchers follow these rules to report profits generated by a firm. The numbers yield interesting insights. .

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The Hype Cycle, Expertise & Dunning Kruger

Barry Ritholtz

Whenever a truly new and innovative technology comes along, there are a tiny number of people who have actual expertise in the space. Where the DK/GHC really overlap is when a new product has a low hurdle rate. Perhaps it is the “void” of experts in each that more accurately describes the connection.

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Data Update 5 for 2022: The Bottom Line!

Musings on Markets

Measuring Profitability The question of whether a company is making or losing money should be a simple one to answer, especially in an age where accounting statements are governed by a myriad of rules, and a legion of number-crunchers follow these rules to report profits generated by a firm. The numbers yield interesting insights.

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Risk = Danger + Opportunity!

CFO News Room

Risk and Hurdle Rates In investing and corporate finance, we have no choice but to come up with measures of risk, flawed though they might be, that can be converted into numbers that drive decisions. Not surprisingly, both these forces play a role in how companies and investors set hurdle rates.

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Data Update 5 for 2024: Profitability - The End Game for Business?

Musings on Markets

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.