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Risk Premium 1
 
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What is a risk premium? An introduction into what a bond is. Video by Chase DeHan, Assistant Professor of Finance at the University of South Carolina Upstate
Views: 14430 Harpett
CFA Level 1- Question Bank- Cost of Equity using Bond Yield + Premium Approach
 
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FinTree website link: http://www.fintreeindia.com FB Page link :http://www.facebook.com/Fin... We love what we do, and we make awesome video lectures for CFA and FRM exams. Our Video Lectures are comprehensive, easy to understand and most importantly, fun to study with! This Video was recorded during a one of the CFA Classes in Pune by Mr. Utkarsh Jain.
Views: 976 FinTree
Relationship between bond prices and interest rates | Finance & Capital Markets | Khan Academy
 
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Why bond prices move inversely to changes in interest rate. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/treasury-bond-prices-and-yields?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-the-yield-curve?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 495236 Khan Academy
Session 6: Estimating Hurdle Rates - Equity Risk Premiums - Historical & Survey
 
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Assess the historical and survey estimates of equity risk premiums as predictors of the future risk premium
Views: 38617 Aswath Damodaran
What is YIELD SPREAD? What does YIELD SPREAD mean? YIELD SPREAD meaning, definition & explanation
 
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What is YIELD SPREAD? What does YIELD SPREAD mean? YIELD SPREAD meaning - YIELD SPREAD definition - YIELD SPREAD explanation. Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license. In finance, the yield spread or credit spread is the difference between the quoted rates of return on two different investments, usually of different credit quality. It is often an indication of the risk premium for investing in one investment product over another. The phrase is a compound of yield and spread. The "yield spread of X over Y" is generally the annualized percentage return on investment (ROI) of financial instrument X minus the ROI of financial instrument Y. There are several measures of yield spread relative to a benchmark yield curve, including interpolated spread (I-spread), zero-volatility spread (Z-spread), and option-adjusted spread (OAS). Yield spread analysis involves comparing the yield, maturity, liquidity and creditworthiness of two instruments, or of one security relative to a benchmark, and tracking how particular patterns vary over time. When yield spreads widen between bond categories with different credit ratings, all else equal, it implies that the market is factoring more risk of default on the lower-grade bonds. For example, if a risk-free 10-year Treasury note is currently yielding 5% while junk bonds with the same duration are averaging 7%, then the spread between Treasuries and junk bonds is 2%. If that spread widens to 4% (increasing the junk bond yield to 9%), then the market is forecasting a greater risk of default, which implies a slowing economy. A narrowing of yield spreads (between bonds of different risk ratings) implies that the market is factoring in less risk, due to an expanding economy. Yield spread can also be an indicator of profitability for a lender providing a loan to an individual borrower. For consumer loans, particularly home mortgages, an important yield spread is the difference between the interest rate actually paid by the borrower on a particular loan and the (lower) interest rate that the borrower's credit would allow that borrower to pay. For example, if a borrower's credit is good enough to qualify for a loan at 5% interest rate but accepts a loan at 6%, then the extra 1% yield spread (with the same credit risk) translates into additional profit for the lender. As a business strategy, lenders typically offer yield spread premiums to brokers who identify borrowers willing to pay higher yield spreads.
Views: 2378 The Audiopedia
FRM: How to get yield to maturity (YTM) with Excel & TI BA II+
 
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Yield to maturity (YTM, yield) is the bond's internal rate of return (IRR). It is the rate that discounts future cash flows to the current market price. For more financial risk management videos, visit our website at http://www.bionicturtle.com!
Views: 212192 Bionic Turtle
Real and nominal return | Inflation | Finance & Capital Markets | Khan Academy
 
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Inflation and real and nominal return. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/inflation-tutorial/real-nominal-return-tut/v/calculating-real-return-in-last-year-dollars?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/inflation-tutorial/inflation-scenarios-tutorial/v/hyperinflation?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: If the value of money is constantly changing, can we compare investment return in the future or past to that earned in the present? This tutorial focuses on how to do this (another good tutorial to watch is the one on "present value"). About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 168061 Khan Academy
Bear Markets Explained - The Critical Risk Premium Spread 2018
 
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Bear markets explained using risk premium spreads! Today we’ll measure the current risk premium in the market. We’ll take a look at risk premium spreads and see how much longer this bull has to run before the next bear market. Make sure you review this video that explains risk premium spreads before continuing: https://youtu.be/H1ZDRzPX4_0 When the Fed lowers interest rates, it affects the risk premium of every asset class. It lowers the return on bonds and widens the spread between safer assets like cash and bonds and riskier assets like stocks. The larger spread means risk assets become more attractive relative to safe ones. And because of the lower return in safe assets, investors have to move out on the risk curve into riskier assets to maintain their returns. This causes riskier assets like stocks to get bid up, driving valuations higher. And when valuations increase, expected future returns go down. Eventually risk premium spreads get pulled really tight together. Valuations get so high that expected returns in stocks almost equal cash… but with much higher volatility. This happens during the late cycle phase of the short-term debt cycle. And by this point no one wants to hold stocks which is why we get bear markets as investors sell their stocks and allocate towards cash and bonds. In the video above we’ll use GMO’s 7 year asset class real return forecast, the inverse of the CAPE minus the rate on 10-year bonds adjusted for inflation, and the rolling 5-year average annual return to equities relative to 2-year bonds to determine the current risk premium in the market. Putting that information together we can see that we’re in the late cycle phase of this bull. But that phase lasts between 18 and 30 months. And we’re closer to the middle than the end. This puts the next bear market around 12-18 months from now. Watch the video above for more! And as always, Remember to Stay Fallible Investors! ***All content, opinions, and commentary by Fallible is intended for general information and educational purposes only.
Views: 1095 Fallible
CFA Level I Yield Spreads Video Lecture by Mr. Arif Irfanullah Part 1
 
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This CFA Level I video covers concepts related to: • Federal Reserve's Interest Rate Policy Tools • U.S Treasury Yield Curve • Yield Curve Shapes • Term Structure Theories • Treasury Spot Rates • Yield Spreads Measures For more updated CFA videos, Please visit www.arifirfanullah.com.
Views: 27275 IFT
Lessons from Capital Market History Part 3:  Market Risk Premium
 
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This video is part of a series of lectures that comprise an MBA level course in Corporate Finance. The lectures build on concepts and principals developed in previous lectures and, therefore, are best viewed in sequence. However, each lecture is divided into topics which can provide students (MBA and advanced undergraduates) with a helpful review of a specific topic. Persons preparing to take the CFA Exams will also find these lectures useful. The course consists of the following video lectures: 1. Investment Decisions and the Fundamentals of Value. 2. Financial Statements and Cash Flow (5 parts) 3. Discounted Cash Flow Valuation (6 parts) 4. Investment Decision Rules (5 parts) 5. Making Capital Investment Decisions (2 parts) 6. Valuation of Bonds (4 parts) 7. Stock Valuation (3 parts) 8. Lessons from Capital Market History (3 parts) 9. Risk and Return (3 parts) 10. CAPM (3 parts) 11. Risk and Capital Budgeting (3 parts) 12. Capital Budgeting Analysis (3 parts) The playlist with all the videos is https://www.youtube.com/playlist?list=PL6d8y3i7anR_v0IhMmBiw1uzLSrI9jXzX&feature=view_all
Views: 11825 shszewczyk
Equity Risk Premium - A Myth
 
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The Equity Risk Premium is commonly used to forecast future stock-market returns from the current yield on government bonds and the historical average return of the stock market. But the relation is not that simple as demonstrated on the S&P 500 stock-market index. Monte Carlo Simulation in Financial Valuation Pedersen, M.E.H., Hvass Laboratories Report HL-1302, 2013 http://ssrn.com/abstract=2332539
Views: 665 Hvass Laboratories
Risk Premium for Stocks | Corporate Finance | CPA Exam BEC | CMA Exam | Chp 12 p 2
 
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A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield; an asset's risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment. The government borrows money by issuing bonds in different forms. The ones we will focus on are the Treasury bills. These have the shortest time to maturity of the different government bonds. Because the government can always raise taxes to pay its bills, the debt represented by T-bills is virtually free of any default risk over its short life. Thus, we will call the rate of return on such debt the risk-free return, and we will use it as a kind of benchmark.
Excel Finance Class 54: Bonds & Interest Rate Risk
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm Learn Interest Rate Risk: 1. The Longer The Maturity, The More YTM Affects Bond Price 2. The Lower The Coupon Rate, The More YTM Affects Bond Price
Views: 11797 ExcelIsFun
How to calculate the bond price and yield to maturity
 
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This video will show you how to calculate the bond price and yield to maturity in a financial calculator. If you need to find the Present value by hand please watch this video :) http://youtu.be/5uAICRPUzsM There are more videos for EXCEL as well Like and subscribe :) Please visit us at http://www.i-hate-math.com Thanks for learning
Views: 277854 I Hate Math Group, Inc
What is RISK PREMIUM? What does RISK PREMIUM mean? RISK PREMIUM meaning, definition & explanation
 
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What is RISK PREMIUM? What does RISK PREMIUM mean? RISK PREMIUM meaning - RISK PREMIUM definition - RISK PREMIUM explanation. Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license. For an individual, a risk premium is the minimum amount of money by which the expected return on a risky asset must exceed the known return on a risk-free asset in order to induce an individual to hold the risky asset rather than the risk-free asset. It is positive if the person is risk averse. Thus it is the minimum willingness to accept compensation for the risk. The certainty equivalent, a related concept, is the guaranteed amount of money that an individual would view as equally desirable as a risky asset. For market outcomes, a risk premium is the actual excess of the expected return on a risky asset over the known return on the risk-free asset. Suppose a game show participant may choose one of two doors, one that hides $1,000 and one that hides $0. Further suppose that the host also allows the contestant to take $500 instead of choosing a door. The two options (choosing between door 1 and door 2, or taking $500) have the same expected value of $500, so no risk premium is being offered for choosing the doors rather than the guaranteed $500. A contestant unconcerned about risk is indifferent between these choices. A risk-averse contestant will choose no door and accept the guaranteed $500, while a risk-loving contestant will derive utility from the uncertainty and will therefore choose a door. If too many contestants are risk averse, the game show may encourage selection of the riskier choice (gambling on one of the doors) by offering a positive risk premium. If the game show offers $1,600 behind the good door, increasing to $800 the expected value of choosing between doors 1 and 2, the risk premium becomes $300 (i.e., $800 expected value minus $500 guaranteed amount). Contestants requiring a minimum risk compensation of less than $300 will choose a door instead of accepting the guaranteed $500. In finance, a common approach for measuring risk premia is to compare the risk-free return on T-bills and the risky return on other investments (using the ex post return as a proxy for the ex ante expected return). The difference between these two returns can be interpreted as a measure of the excess expected return on the risky asset. This excess expected return is known as the risk premium. Equity: In the stock market the risk premium is the expected return of a company stock, a group of company stocks, or a portfolio of all stock market company stocks, minus the risk-free rate. The return from equity is the sum of the dividend yield and capital gains. The risk premium for equities is also called the equity premium. Note that this is an unobservable quantity since no one knows for sure what the expected rate of return on equities is. Nonetheless, most people believe that there is a risk premium built into equities, and this is what encourages investors to place at least some of their money in equities. Debt: In the context of bonds, the term "risk premium" is often used to refer to the credit spread (the difference between the bond in
Views: 6331 The Audiopedia
Bond Investing 101: Understanding Interest Rate Risk and Credit Risk
 
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This video is one part of BondSavvy's 10-part video "The Crash Course on Corporate Bond Investing." The full Crash Course video is included with a subscription to BondSavvy https://www.bondsavvy.com/corporate-bond-investment-picks or can be bought on its own here https://www.bondsavvy.com/a-la-carte/corporate-bond-investing-101. This video explains the differences between interest rate risk and credit risk and how you can factor this into your next corporate bond investment. Many investors only invest in investment-grade bonds because they are afraid of the default risk of high-yield (or below investment grade) bonds. The challenge with this thinking is that investment-grade bonds often have longer durations (or time until maturity) and are therefore more sensitive to changes in interest rates. To alleviate these risks, it's important for investors to consider both investment-grade and non-investment-grade corporate bonds. You will learn the following by watching this video: * Difference between investment-grade corporate bonds and high-yield corporate bonds * Difference in default rates between investment-grade corporate bonds and high-yield corporate bonds * How bond prices are quoted * How owning high-yield corporate bonds can help reduce investors' interest rate risk * Why shorter-dated bonds are less sensitive to changes in interest rates * What happens to bond prices when interest rates increase?
Views: 134 BondSavvy
Understanding the yield curve
 
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You read about it a lot in the business pages, and it sounds super complicated. But the yield curve is dead easy to read. Especially if you've every played chutes and ladders (snakes and ladders in the UK)
Views: 51981 Marketplace APM
FRM: TI BA II+ to compute bond yield (YTM)
 
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Given four inputs (price, term/maturity, coupon rate, and face/par value), we can use the calculator's I/Y to find the bond's yield (yield to maturity). For more financial risk videos, visit our website! http://www.bionicturtle.com
Views: 114617 Bionic Turtle
Risk Premium 2
 
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Second video discussing how to graph a risk premium in a bond market. Video by Chase DeHan, Assistant Professor of Finance at the University of South Carolina Upstate
Views: 1807 Harpett
Term Structure of Interest Rates - Modern - Risk Premium Based
 
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This is a brief introduction to how we think about the term structure of interest rates currently.
Bonds | Confused between the rates: Spot, Forward, Coupon, Current Yield, IRR, YTM, BEY
 
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CFA | FRM | SFM | Excel Live Classes | Videos Available Globally For Details: www.aswinibajaj.com WhatsApp: +91 9831149876 or https://api.whatsapp.com/send?phone=919830497377&text=Want%20to%20know%20more%20about%20classes & we shall get back to you. E-mail: [email protected] Hope you had a great learning experience! Do Like and Subscribe! And check our other videos on Finance (CFA, FRM, SFM), Resume making, Career options, etc. Click to access playlist. https://www.youtube.com/channel/UCyt8... Thank you.
Views: 9721 ASWINI BAJAJ
WACC, Cost of Equity, and Cost of Debt in a DCF
 
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In this WACC and Cost of Equity tutorial, you'll learn how changes to assumptions in a DCF impact variables like the Cost of Equity, Cost of Debt. By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" You'll also learn about WACC (Weighted Average Cost of Capital) - and why it is not always so straightforward to answer these questions in interviews. Table of Contents: 2:22 Why Everything is Interrelated 4:22 Summary of Factors That Impact a DCF 6:37 Changes to Debt Percentages in the Capital Structure 11:38 The Risk-Free Rate, Equity Risk Premium, and Beta 12:49 The Tax Rate 14:55 Recap and Summary Why Do WACC, the Cost of Equity, and the Cost of Debt Matter? This is a VERY common interview question: "If a company goes from 10% debt to 30% debt, does its WACC increase or decrease?" "What if the Risk-Free Rate changes? How is everything else impacted?" "What if the company is bigger / smaller?" Plus, you need to use these concepts on the job all the time when valuing companies… these "costs" represent your opportunity cost from investing in a specific company, and you use them to evaluate that company's cash flows and determine how much the company is worth to you. EX: If you can get a 10% yield by investing in other, similar companies in this market, you'd evaluate this company's cash flows against that 10% "discount rate"… …and if this company's debt, tax rate, or overall size changes, you better know how the discount rate also changes! It could easily change the company's value to you, the investor. The Most Important Concept… Everything is interrelated - in other words, more debt will impact BOTH the equity AND the debt investors! Why? Because additional leverage makes the company riskier for everyone involved. The chance of bankruptcy is higher, so the "cost" even to the equity investors increases. AND: Other variables like the Risk-Free Rate will end up impacting everything, including Cost of Equity and Cost of Debt, because both of them are tied to overall interest rates on "safe" government bonds. Tricky: Some changes only make an impact when a company actually has debt (changes to the tax rate), and you can't always predict how the value derived from a DCF will change in response to this. Changes to the DCF Analysis and the Impact on Cost of Equity, Cost of Debt, WACC, and Implied Value: Smaller Company: Cost of Debt, Equity, and WACC are all higher. Bigger Company: Cost of Debt, Equity, and WACC are all lower. * Assuming the same capital structure percentages - if the capital structure is NOT the same, this could go either way. Emerging Market: Cost of Debt, Equity, and WACC are all higher. No Debt to Some Debt: Cost of Equity and Cost of Debt are higher. WACC is lower at first, but eventually higher. Some Debt to No Debt: Cost of Equity and Cost of Debt are lower. It's impossible to say how WACC changes because it depends on where you are in the "U-shaped curve" - if you're above the debt % that minimizes WACC, WACC will decrease. Otherwise, if you're at that minimum or below it, WACC will increase. Higher Risk-Free Rate: Cost of Equity, Debt, and WACC are all higher; they're all lower with a lower Risk-Free Rate. Higher Equity Risk Premium and Higher Beta: Cost of Equity is higher, and so is WACC; Cost of Debt doesn't change in a predictable way in response to these. When these are lower, Cost of Equity and WACC are both lower. Higher Tax Rate: Cost of Equity, Debt, and WACC are all lower; they're higher when the tax rate is lower. ** Assumes the company has debt - if it does not, taxes don't make an impact because there is no tax benefit to interest paid on debt.
Expectation Theories of Yield Term Structures
 
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Pure expectations says the long spot rates predict future spot rates (i.e., the forward rate is an unbiased predictor of future spot rates). "Liquidity Preference" adds a RISK PREMIUM: investors in longer maturities demand compensation for maturity risk (e.g., uncertainty, greater duration/interest rate risk). "Preferred habitat" adds the technical factor of supply/demand.
Views: 31644 Bionic Turtle
CAPM Capital Asset Pricing Model in 4 Easy Steps - What is Capital Asset Pricing Model Explained
 
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OMG wow! I'm SHOCKED how easy clicked here http://www.MBAbullshit.com for CAPM or Capital Asset Pricing Model. This is a model applied to indicate an investor's "expected return", or how much percentage profit a company investor ought to logically demand to be a "fair" return for making investments into a company. http://mbabullshit.com/blog/2011/08/06/capm-capital-asset-pricing-model/ To find this, yet another question can be queried: Just how much is the sound "decent" percentage % profit that a financier should probably receive if he invests in a business (having comparatively high risk) in contrast to putting his money in government bonds which might be regarded to be "risk free" and instead of putting his hard earned cash in the general share market presumed to offer "medium" risk? Visibly, it is almost only "fair" that in fact the investor receives a gain higher compared to the government bond percentage (due to the reason that the solitary enterprise possesses higher risk). It's moreover only just that he should expect a return larger than the broad stock exchange yield, because the specific business enterprise has higher risk compared to the "medium risk" general stock market. So just as before,how much exactly should this investor fairly receive as a smallest expected return? This is where the CAPM Model or Capital Asset Pricing Model comes in. The CAPM Formula includes all these variables simultaneously: riskiness of the individual firm depicted by its "beta", riskiness of the universal stock market, rate of interest a "risk free" government bond would give, as well as others... and then spits out an actual percent which your investor "should be allowed" to take for investing his or her hard earned money into this "riskier" single firm. This particularly exact percent is known as the "expected return", given that it can be the yield that he should "expect" or require to obtain if he invests his hard earned cash into a specific firm. This precise percentage is known as the "cost of equity". The CAPM Model or CAPM Formula looks something like this: Expected Return = Govt. Bond Rate + (Risk represented by "Beta")(General Stock Market Return --Govt. Bond Rate) Utilizing this formula, you are able to see the theoretically exact rate of return theindividual business enterprise investor ought to reasonably expect for his or her investment, if the CAPM Model or Capital Asset Pricing Model is to be held. http://www.youtube.com/watch?v=LWsEJYPSw0k What is CAPM? What is the Capital Asset Pricing Model?
Views: 484606 MBAbullshitDotCom
Investopedia Video: The Basics Of Bond Duration
 
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Duration tells investors the length of time, in years, that it will take a bond's cash flows to repay the investor the price he or she paid for the bond. A bond's duration also tells investors how much a bond's price might change when interest rates change i.e. how much risk they face from interest rate changes.
Views: 88956 Investopedia
Level I CFA: CF Cost of Capital-Lecture 2
 
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2018 Reading 36 2019 Reading 35 This CFA exam prep video Costs of the different sources of capital - Cost of debt - Cost of preferred stock - Cost of common equity Capital asset pricing model Dividend discount model Bond yield plus risk premium approach For the COMPLETE SET of 2018 Level I Videos sign up for the IFT Level I FREE VIDEOS Package: https://ift.world/free Subscribe now: http://www.youtube.com/user/arifirfanullah?sub_confirmation=1 For more videos, notes, practice questions, mock exams and more visit: https://www.ift.world/ Visit us on Facebook: https://www.facebook.com/Pass.with.IFT/
Views: 7514 IFT
Estimating The Cost Of Debt For WACC - DCF Model Insights
 
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In today’s video, we learn about calculating the cost of debt used in the weighted average cost of capital (WACC) calculation. This is part of the DCF insights series for more advanced students but it offers valuable insights about the assumptions used in the model. Like many other segments of the discounted cash flow (DCF) model, the cost of debt is very important. The four methods covered in the video are; - Yield to maturity (YTM) approach - Debt rating approach - Synthetic Rating Approach - Interest on Debt Approach Link to the country default spread and risk premium database; http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html Link to the bond profile for Apple Inc used in the video; http://quicktake.morningstar.com/stocknet/bonds.aspx?symbol=aapl&country=arg Link to an amazing presentation summarizing the DCF Model by Aswath Damodaran; http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/basics.pdf Please like and subscribe to my channel for more content every week. If you have any questions, please comment below. For those who may be interested in finance and investing, I suggest you check out my Seeking Alpha profile where I write about the market and different investment opportunities. I conduct a full analysis on companies and countries while also commenting on relevant news stories. http://seekingalpha.com/author/robert-bezede/articles#regular_articles
Views: 3227 FinanceKid
LINGO: Risk Premium
 
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http://texasenterprise.org/series/lingo McCombs Senior Lecturer of Finance Sandy Leeds illuminates the concept of the "risk premium" that less-trustworthy borrowers pay on their loans.
calculate and interpret the cost of equity capital using the capital asset pricing model approach,
 
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calculate and interpret the cost of equity capital using the capital asset pricing model approach, the dividend discount model approach, and the bond-yield-plus risk-premium approach;
Views: 9 Ted Stephenson
Session 6 (Undergraduate): Risk free Rates and Risk Premiums (Part 1)
 
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We started on the question of risk free rates and how to assess them in different currencies. In particular, we noted that government bonds are not always risk free and may have to be cleansed of default risk. The rest of today's class was spent talking about equity risk premiums. The key theme to take away is that equity risk premiums don't come from models or history but from our guts. When we (as investors) feel scared or hopeful about everything that is going on around us, the equity risk premium is the receptacle for those fears and hopes. Thus, a good measure of equity risk premium should be dynamic and forward looking. We looked at two different ways of estimating the equity risk premium. 1. Survey Premiums: I had mentioned survey premiums in class and two in particular - one by Merrill of institutional investors and one of CFOs. You can find the Merrill survey on its research link (but you may be asked for a password). You can get the other surveys at the links below: CFO survey: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2422008 Analyst survey: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2450452 2. Historical Premiums: We also talked about historical risk premiums. To see the raw data on historical premiums on my site (and save yourself the price you would pay for Ibbotson's data...) go to updated data on my website: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/data.html Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session6.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6atest.pdf Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6asoln.pdf
Views: 4319 Aswath Damodaran
Interest Rate and Stock Market [HINDI]
 
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Interest Rate and Stock Market returns are in inverse proportion to each other. In layman terms, if the interest rate increase then the returns from stock market reduces and vice versa. Bond yields are the precursor to the direction in which the stock market will move. The investment in the stock market depends on the premium it can generate compared to the safe investment options like Fixed Deposit etc. The reason being, as an investor i am willing to invest my money in riskier option if it can generate an additional return for me compared to safer options. In other words, i want a premium for the risk i am taking. The bond yield or interest rates also impact the profitability of the companies as it can increase their interest outflow. In low-interest rate regime, companies can borrow at lower rates. Thus, companies can utilize this money for their growth. If the bond yield or interest rate increase, the FII's also shift their partial investments from equity to debt. The most impacted are small and midcap stocks in case of increasing bond yield or interest rate. If you liked this video, You can "Subscribe" to my YouTube Channel. The link is as follows https://goo.gl/nsh0Oh By subscribing, You can daily watch a new Educational and Informative video in your own Hindi language. For more such interesting and informative content, join me at: Website: http://www.nitinbhatia.in/ T: http://twitter.com/nitinbhatia121 G+: https://plus.google.com/+NitinBhatia #NitinBhatia
Views: 16329 Nitin Bhatia
Introduction to The Equity Risk Premium
 
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Professor David Hillier, University of Strathclyde; Short videos for my students Check out www.david-hillier.com for my personal website.
Views: 2830 David Hillier
Marginal Cost of Capital Part Three of Four
 
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Marginal Cost of Capital Example in Four Parts. Part three concludes the cost of common calculations with the Security Market Line and Bond Yield + Risk Premium approaches.
Views: 4911 Kevin Bracker
Bonds Default Risk and Credit Ratings
 
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Bond default risk; bond credit ratings; determinants of credit ratings; yield spreads of corporate and municipal bonds over Treasuries
Views: 1553 Elinda Kiss
Bond Pricing, Valuation, Formulas, and Functions in Excel
 
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Excel Forum: https://www.teachexcel.com/talk/microsoft-office?src=yt Excel Tutorials: https://www.teachexcel.com/src=yt This tutorial will show you how to calculate bond pricing and valuation in excel. This teaches you how to do so through using the NPER() PMT() FV() RATE() and PV() functions and formulas in excel. To follow along with this tutorial and download the spreadsheet used and or to get free excel macros, keyboard shortcuts, and forums, go to: http://www.TeachMsOffice.com
Views: 171368 TeachExcel
Interest Rates - Nominal vs Real: Inflation, Default, Maturity and Liquidity Risk
 
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This short lecture will present the financial definition of interest and discuss the factors that affect nominal interest rates; including inflation, default risk, maturity risk (yield curve) and liquidity risk. Learning business English is like learning a new language.
Views: 12224 etramway
Part4-How to calculate Risk premium and insurance premium using utility function
 
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In this lesson, we learn how to calculate risk and insurance premium using a utility function
Views: 798 Shokoufeh Mirzaei
Finding a Bond's Yield Using the Texas Instruments BA-II Plus Calculator.
 
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Video provides step-by-step instructions for finding the yield of a corporate bond using the Texas Instruments BA-II Plus Calculator
Views: 122376 Jim McIntyre
Professor Ilaria Piatti: Expected term structures
 
01:10:57
Treasury bond yields can be decomposed into expectations about future short rates and a risk premia. A vast literature has investigated the properties of this decomposition, but while this has advanced our understanding of the economics of Treasuries, there are still many doubts about the statistical findings in the literature. This paper exploits an extensive dataset of yield curve forecasts to extract model-free measures of bond risk premia and studies whether their dynamics are consistent with the properties of standard measures of expected bond returns derived from realised data. Our panel of subjective bond risk premia also allows us to analyse explicitly the expectation formation process, by testing the empirical support of some of the most prominent models of information rigidities. https://www.sbs.ox.ac.uk/school/events-1/deans-seminar-series/summaries-videos
CFA Level I: Corporate Finance - Cost of Capital LOS A
 
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FinTree website link: http://www.fintreeindia.com FB Page link :http://www.facebook.com/Fin... These video series covers the following key area: -the weighted average cost of capital (WACC) of a company; -how taxes affect the cost of capital from different capital sources; -the use of target capital structure in estimating WACC and how target capital structure weights may be determined; -how the marginal cost of capital and the investment opportunity schedule are used to determine the optimal capital budget; -the marginal cost of capital’s role in determining the net present value of a project; -the cost of debt capital using the yield-to-maturity approach and the debt-rating approach; - the cost of noncallable, nonconvertible preferred stock; -the cost of equity capital using the capital asset pricing model approach, the dividend discount model approach, and the bond-yield-plus risk-premium approach; -the beta and cost of capital for a project -uses of country risk premiums in estimating the cost of equity; -the marginal cost of capital schedule, explain why it may be upward-sloping with respect to additional capital, and calculate and interpret its break-points; - the correct treatment of flotation costs. We love what we do, and we make awesome video lectures for CFA and FRM exams. Our Video Lectures are comprehensive, easy to understand and most importantly, fun to study with! This Video lecture was recorded by our popular trainer for CFA, Mr. Utkarsh Jain, during one of his live CFA Level I Classes in Pune (India).
Views: 2201 FinTree
CFA LEVEL 1 - Risk free rates, Risk premiums & Required rate - GOURAV KABRA
 
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Course - CFA Level 1 Subject - Quantitaive Methods. Reading #6 - Time Value of Money. Topic - Risk free rates, Risk premiums & Required rate.
Views: 105 Gourav Kabra
How to find the Expected Return and Risk
 
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Hi Guys, This video will show you how to find the expected return and risk of a single portfolio. This example will show you the higher the risk the higher the return. Please watch more videos at www.i-hate-math.com Thanks for learning !
Views: 183877 I Hate Math Group, Inc
Risk Premium Modelling
 
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Quick way to generate risk quote comparisons for your client
Views: 534 RIadvisersystems
Bond Yields Don't Tell a Nice Story
 
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What do I do? Full-time independent stock market analyst and researcher: https://sven-carlin-research-platform.teachable.com/p/stock-market-research-platform Check the comparative stock list table on my Stock market research platform under curriculum preview! I am also a book author: Modern Value Investing book: https://amzn.to/2lvfH3t More about me and some written reports at the Sven Carlin blog: https://svencarlin.com Stock market for modern value investors Facebook Group: https://www.facebook.com/groups/modernvalueinvesting/ As an investor it is extremely important to keep an eye on bond yields as stock valuations depend on their risk premium. The higher interest rates are the lower are stock values. In this video we discuss treasury yields, what is the market's perception about them and how to position yourself and your portfolio.
Not All Bonds are Created Equal
 
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(Schwab Bond Market Today 002) Last time Kathy spoke about the recent jump in bond yields and why we think some of it has to do with a rise in the risk premium for inflation that was held down by the Federal Reserve’s bond buying program. But what she has noticed is that hasn’t necessarily happened in other markets – like the corporate bond market. On this week’s episode of Bond Market Today, Kathy is joined by Collin Martin to discuss why that might be the case. Subscribe to our channel: https://www.youtube.com/charlesschwab Click here for more insights: http://www.schwab.com/insights/ (0218-8BL4)
Views: 3419 Charles Schwab
BVTV: High drama for Italian high yield?
 
05:41
While political instability is nothing new for Italy, last week’s developments have triggered major market moves. The 10-year Italian government spread to Bunds jumped to as high as 288bps last week, which is an impressive move if you consider that investors were only asking for a risk premium of 122bps at the beginning of the month. Despite a rebound in markets towards the end of the week, the spread to Bunds remains elevated. In an environment where government bonds are experiencing such significant moves, I am particularly interested to see how Italian high yield credits are coping. High yield fund manager James Tomlins joined me this morning to discuss these highly timely topics – tune in to hear James’ thoughts on prospects for Italian businesses with heightened credit risk.
Views: 1248 Bond Vigilantes
Default Risk Premium
 
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An Easy Overview Of "Default Risk Premium"
Views: 2964 Christopher Hunt
What is a Risk-Free Rate?
 
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Welcome to the Investors Trading Academy talking glossary of financial terms and events. Our word of the day is “Risk-Free Rate” The risk-free rate is the rate of return that investors require for investments with no risk. In essence, this return compensates investors for the time value of money. Inflation dictates that money in the future will not purchase as much as it does now, and the risk-free rate compensates investors for the time that their capital is tied up. Typically, Treasury rates are used as measures of risk-free rates. It is generally good practice to match the duration of the Treasury holding to the length of time of the average return. Alternatively, there are arguments made that since equities are indefinite investment vehicles, the longest-term Treasury should be used. Whatever you choose to use as the risk-free rate is not as important as staying consistent throughout your calculations. However, it is important that you choose a reasonable risk-free rate. By Barry Norman, Investors Trading Academy
FINANCIAL STATEMENT ANALYSIS   Syllabus   ADVANCED  15  COST OF CAPITAL
 
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COST OF CAPITAL a calculate and interpret the weighted average cost of capital (WACC) of a company; b describe how taxes affect the cost of capital from different capital sources; c describe the use of target capital structure in estimating WACC and how target capital structure weights may be determined; d explain how the marginal cost of capital and the investment opportunity schedule are used to determine the optimal capital budget; e explain the marginal cost of capital’s role in determining the net present value of a project; f calculate and interpret the cost of debt capital using the yield-to-maturity approach and the debt-rating approach; COST OF CAPITAL g calculate and interpret the cost of noncallable, nonconvertible preferred stock; h calculate and interpret the cost of equity capital using the capital asset pricing model approach, the dividend discount model approach, and the bond-yield-plus risk-premium approach; i calculate and interpret the beta and cost of capital for a project; j describe uses of country risk premiums in estimating the cost of equity; k describe the marginal cost of capital schedule, explain why it may be upward-sloping with respect to additional capital, and calculate and interpret its break-points; l explain and demonstrate the correct treatment of flotation costs.
Views: 15 VATUAE Jayakumar

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