A French Biotech Sanofi has substantial operations in Croatia. France is a mature market with ERP of 4%. Croatia is an emerging market. French equities have 2 times the standard deviation of government bonds in Croatia. Sanofi earned 7 Billion in France and 3 Billion in Croatia. Government bonds ( denominated) in France pays 3% and in Croatia pays 3.75%. The Croatian Kuna denominated bond pays 6%. The foreign currency default spread is same as the local currency default spread in Croatia. What is the ERP for Sanofi?

Answer rating: 100% (QA)

To calculate the Equity Risk Premium ERP for Sanofi we need to consider the risk premium associated ... View the full answer