Volatilities for individual stock and market indexes in emerging economies are typically higher than those for U.S. stocks and indexes. Should that mean that the cost of capital for investments in emerging economies is higher, too? Explain your answer.
Answer to relevant QuestionsWhat are some of the common features of the 2007–2009 stock market crash and previous market crashes—for example, Japan’s in the 1990s or the Internet bubble around the turn of the millennium? Which type of business, a software company or an electric utility, would benefit more from improving ROIC than from increasing growth? Why? Explain how the process of valuing a high-growth company differs from valuing an established company. Last year, GrowthCo traded at $20 per share. Over the past 12 months, the company’s share price rocketed to $60 per share. Does this mean the share price was misvalued last year? Why is maturity mismatch important for understanding a bank’s risk and analyzing its performance?
Post your question