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NEWSLETTER of May 20, 2022


The following content has been added at finexpert:


Studies > Corporate Finance

CFA Institute
THE NEW AGE OF SPECIAL PURPOSE ACQUISITION COMPANIES
CFA Institute releases a report for investors interested in investing in Special Purpose Acquisition Companies or SPACs with recommendations for regulators to consider in making them a sound investment vehicle. The paper lays out some of the complications of a SPAC structure and how to assess an investment either as a trading vehicle or a long-term investment strategy. >more

Studies > Corporate Finance

Morgan Stanley | Oliver Wyman
CLIMATE, CRYPTO, AND COMPETING IN THIS CYCLE
Wholesale banks face new uncertainties in 2022, but six market shifts will support revenue and returns over the next three years. Banks must take advantage and purposely face two major disruptions on the horizon: Climate Transition and Digital Assets. The franchise hangs in the balance. >more

Studies > Alternative Investments

BCG
INFRASTRUCTURE STRATEGY 2022
While infrastructure investment opportunities are rife, returns from these projects vary. Some investment strategies are well suited for big gains in today’s environment; others are designed for smaller, albeit consistent, returns. Given the many possible investment strategies and the growing popularity of infrastructure investments as a whole, BCG and EDHECinfra, a provider of indexes and analytics for infrastructure investors, have partnered on “Infrastructure Strategy 2022,” the first in a series of annual reports intended to categorize the universe of investors by their priorities and focus as well as by their risk-adjusted performance. >more

Studies > Risk Management

BlackRock
GEOPOLITICAL RISK DASHBOARD
The global BlackRock Geopolitical Risk Indicator (BGRI) aims to capture the market attention to our geopolitical risks. Our overall geopolitical risk indicator has spiked to its highest level in more than a year. This is driven by elevated market attention to conflict-related risks generally, and Russia-NATO conflict specifically. >more

Studies > Macro

Deloitte
PERSPEKTIVEN 2030: WACHSTUMSCHANCEN FÜR DEUTSCHLAND
Germany as a business location is facing a formative decade: In addition to current crises, macro trends with a long-term impact require the fundamental transformation of the economy and society. In addition to numerous challenges, this transformation holds great potential for prosperity and sustainable growth: Economic output in Germany could increase by an average of 3.4 percent per year by the end of the decade - with a direct impact on per capita income and prosperity in this country. >more


Research Papers > Corporate Valuation

EQUITY RISK PREMIUMS (ERP): DETERMINANTS, ESTIMATION, AND IMPLICATIONS – THE 2022 EDITION
Aswath Damodaran
2022
The equity risk premium is the price of risk in equity markets, and it is not just a key input in estimating costs of equity and capital in both corporate finance and valuation, but it is also a key metric in assessing the overall market. Given its importance, it is surprising how haphazard the estimation of equity risk premiums remains in practice. We begin this paper by looking at the economic determinants of equity risk premiums, including investor risk aversion, information uncertainty and perceptions of macroeconomic risk. In the standard approach to estimating the equity risk premium, historical returns are used, with the difference in annual returns on stocks versus bonds, over a long period, comprising the expected risk premium. We note the limitations of this approach, even in markets like the United States, which have long periods of historical data available, and its complete failure in emerging markets, where the historical data tends to be limited and volatile. We look at two other approaches to estimating equity risk premiums – the survey approach, where investors and managers are asked to assess the risk premium and the implied approach, where a forward-looking estimate of the premium is estimated using either current equity prices or risk premiums in non-equity markets. In the next section, we look at the relationship between the equity risk premium and risk premiums in the bond market (default spreads) and in real estate (cap rates) and how that relationship can be mined to generate expected equity risk premiums. We close the paper by examining why different approaches yield different values for the equity risk premium, and how to choose the “right” number to use in analysis. >more

Research Papers > Alternative Investments

GENDER DIFFERENCES IN HEDGE FUND PERFORMANCE PERSISTENCE
William Joseph Klubinski, Thanos Verousis, and Fanis Tsoligkas
2022
This paper analyses gender differences in hedge fund (HF) performance persistence using parametric and non-parametric risk-adjusted-performance persistence indicators. We find evidence consistent with performance persistence, which in relative (risk-adjusted) terms, is more pronounced amongst females, as opposed to male managers, in short to medium-term horizons. We also, observe a complete loss of persistence for the female managers in the long term, which for the male managers prevails and continues throughout all analysed periods. The findings contribute to the debate on the existence of differences in behaviour across males and females. >more

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