Thank you Professor Damodaran for sharing your expertise! I was having a difficult time trying to understand valuation if it were done in different currency. Logically, the vauation must be the same, now I got!
Thank you so much. I had one question regarding the country risk premium (CRP). If I am an Egyptian investor valuing an Egyptian company do I need to incorporate the CRP in my CAPM or not?
Does the fact that bovespa is an index of about 70 stocks while the S&P 500 is an index of 500 stocks contribute to the higher volatility of Bovespa? So is this a fair comparison?
Professor, where's the link the the PRS services? Their website's somewhat confusing, do you have the PRS ratings for 2021 (or even 2020) saved as a slide?
I have a table in my equity risk premium paper (look on my website for the 2020 edition; the 2021 edition will be out in a couple of week) that provides the PRS scores, but only in ranges. I pay for their data, but I cannot reproduce that data fully. That would be unfair to them. They are a commercial data service and that would be giving away their commercial products for free.
Thank you for all of this incredible content! Quick question. To estimate the Cost of Equity of Coca Cola in 2012, would that computed 7.14% be the ERP used to compute the COE or would that be added to US Market Risk Premium being that CC is an American company?
Hey man! As far as my intuition is concerned that number for CRP (calculated by using weighted average of revenues across regions) would be used to calculate a company risk premium using either of the three approaches and then you would move on to calculate the cost of equity for that company. Cheers mate! Hope it helps :)
cant we just use weighted avg. of ERP of countries to come at final ERP in place of doing Weigthed avg. of CRP then computing ERP. WHAT WILL BE THE disadvantages of doing that. and when we can do that?
@@aman.2912 I remember going to Teaching --> Regular classes --> Valuation --> Assignments and projects. Don't know why the link is dis-abled now. Please let me know if the link works for u
I don't get it, if the inflation rate in Russia has been about 15-20% in the last few years, and their currency has depreciated dramatically, shouldn't the ERP for Russia be what you have calculated with the additional 15-20% for those who invest in the Russian currency? Even if their ERP is 7% and you invest up there and get your 7% you will still wind up wiped out by the depreciation of the Russian Ruble. Isn't it common sense that the ERP for Russia has to be the 6.85% you've calculated + 15% rate of inflation/depreciation of their currency, which makes it the total ERP of 21.85% for Russia?
ERP is only one part of the discount rate. Russian ruble inflation risk will be counted in the risk free rate, as part of the currency, if I am not mistaken. If your company earns in rubles, of course you will take a high risk free rate, which will raise your cost of capital. But on the other side, if you earn in rubles, some of that currency inflation will spill over to your higher profits, right? If you use EUR as a currency, then those profits will be nominally smaller as well. Not sure if this is 100% correct, this is how I view it as an amateur.
@@BorisGligorijevic I think if you have all your revenues in the Russian Ruble, the banks will ask for a hefty premium and only lend to you in the short term. Simply because of the currency risk. You might wind up paying a 30ish % premium just to service your interest payments, and that without even taking the principal into account. Professor has explained a similar case with that taxi company (I think the one in the Philippines )
@@jamesstmanhattan Could be. In the end we have to calculate that currency risk somewhere in the cost of capital, your question was where exactly, did I get it right? I do the discount rates way less profesionally (simple), so I did not have this problem before. I know its not the best, but at least I am consistent. And I am invested in Gazprom, for example. I went with some 15% discount rate. The bulk of their revenues are from abroad, in foreign currencies anyway.
@@jamesstmanhattan Thats a common thought. Sure, the state and oligarchs are involved, but it is one of the cheapest oil and gas in the World, currenty finishing large pipeline to Germany, and already having finished pipeline to China. Dividend is huge and stable. I bought the stock on Frankfurt exchange, so far some 40% up + 10% dividends on paid price. Willing to take some Putin risk. ;)
Thank you Professor Damodaran for sharing your expertise! I was having a difficult time trying to understand valuation if it were done in different currency. Logically, the vauation must be the same, now I got!
Thank you very much for sharing knowledge, Professor Damodaran. Cheers and gratitude from Perú.
sir which approach we should use for the production-ERP method?
the example which u used for ROYAL DUTCH COMPANY?
Thank you so much. I had one question regarding the country risk premium (CRP). If I am an Egyptian investor valuing an Egyptian company do I need to incorporate the CRP in my CAPM or not?
Well, you can use the CRP to estimate ERP, which in turn allows you to find Cost of equity using CAPM.
Does the fact that bovespa is an index of about 70 stocks while the S&P 500 is an index of 500 stocks contribute to the higher volatility of Bovespa? So is this a fair comparison?
Hello Dr. Damadoran, which one of your videos was it that you talked about the acquisitions being the surest way companies can destroy value?
“Look out of the window” :DDD
Thank you, professor!
Professor, where's the link the the PRS services? Their website's somewhat confusing, do you have the PRS ratings for 2021 (or even 2020) saved as a slide?
I have a table in my equity risk premium paper (look on my website for the 2020 edition; the 2021 edition will be out in a couple of week) that provides the PRS scores, but only in ranges. I pay for their data, but I cannot reproduce that data fully. That would be unfair to them. They are a commercial data service and that would be giving away their commercial products for free.
@@AswathDamodaranonValuation I've seen the websites, they've got $4000 and $9000 products, that's quite pricey
Thank you for all of this incredible content! Quick question. To estimate the Cost of Equity of Coca Cola in 2012, would that computed 7.14% be the ERP used to compute the COE or would that be added to US Market Risk Premium being that CC is an American company?
Hey man! As far as my intuition is concerned that number for CRP (calculated by using weighted average of revenues across regions) would be used to calculate a company risk premium using either of the three approaches and then you would move on to calculate the cost of equity for that company. Cheers mate! Hope it helps :)
I guess I am wrong, but do check the video again at 1:08:28. That should clear it out
Has there been any study that shows a tendency that the ERP for any country tends to “revert to the mean”?
cant we just use weighted avg. of ERP of countries to come at final ERP in place of doing Weigthed avg. of CRP then computing ERP.
WHAT WILL BE THE disadvantages of doing that. and when we can do that?
Professor Thank you for the lectures. Is there any way we can get a link to the weekly challenges? Curious to try them out
Try the webpage for the class. it should be on the playlist description.
@@AswathDamodaranonValuation Thanks professor. Found it.
Sir Where will i get any 5 indian companies complete valuation?
All student assignments of company valuation are available on the Damodaran s website
@@vinyvin561 I can't find it. Could you please share link if possible?
@@aman.2912 I remember going to Teaching --> Regular classes --> Valuation --> Assignments and projects.
Don't know why the link is dis-abled now.
Please let me know if the link works for u
Is bubble is coming?
Can somebody please tell me where to find the valuation of the week?
I also spent some time looking and couldn't find it. Did you ultimately find it?
@@peterbohrmann9415 No, unfortunately not.
East Timor is an independent country, not a region of Indonesia... It was occupied for too long but is independent since 2002.
I don't get it, if the inflation rate in Russia has been about 15-20% in the last few years, and their currency has depreciated dramatically, shouldn't the ERP for Russia be what you have calculated with the additional 15-20% for those who invest in the Russian currency? Even if their ERP is 7% and you invest up there and get your 7% you will still wind up wiped out by the depreciation of the Russian Ruble.
Isn't it common sense that the ERP for Russia has to be the 6.85% you've calculated + 15% rate of inflation/depreciation of their currency, which makes it the total ERP of 21.85% for Russia?
ERP is only one part of the discount rate. Russian ruble inflation risk will be counted in the risk free rate, as part of the currency, if I am not mistaken. If your company earns in rubles, of course you will take a high risk free rate, which will raise your cost of capital. But on the other side, if you earn in rubles, some of that currency inflation will spill over to your higher profits, right? If you use EUR as a currency, then those profits will be nominally smaller as well. Not sure if this is 100% correct, this is how I view it as an amateur.
@@BorisGligorijevic I think if you have all your revenues in the Russian Ruble, the banks will ask for a hefty premium and only lend to you in the short term. Simply because of the currency risk. You might wind up paying a 30ish % premium just to service your interest payments, and that without even taking the principal into account. Professor has explained a similar case with that taxi company (I think the one in the Philippines )
@@jamesstmanhattan Could be. In the end we have to calculate that currency risk somewhere in the cost of capital, your question was where exactly, did I get it right?
I do the discount rates way less profesionally (simple), so I did not have this problem before. I know its not the best, but at least I am consistent. And I am invested in Gazprom, for example. I went with some 15% discount rate. The bulk of their revenues are from abroad, in foreign currencies anyway.
@@BorisGligorijevic How do I buy Gazprom in America? I think it's the company Putin and his oligarch friends run
@@jamesstmanhattan Thats a common thought. Sure, the state and oligarchs are involved, but it is one of the cheapest oil and gas in the World, currenty finishing large pipeline to Germany, and already having finished pipeline to China. Dividend is huge and stable. I bought the stock on Frankfurt exchange, so far some 40% up + 10% dividends on paid price. Willing to take some Putin risk. ;)
I am not in the class and I don't have access to the Google shit, but I will write CCL
혹시 한국인 수강자분들 계시면 같이 토론하면서 공부하면 좋을것 같습니다~
Time to upgrade your laptop professor :)
Sub-titels please