Beatnik

billy22g Wrote:
-------------------------------------------------------
> tfc Wrote:
> --------------------------------------------------
> -----
> > country risk premium,
> >
> > Project Beta (PB= AB {1+ (1-t) d/e} from one
> to
> > another
> >
> > min and max value for European, Americal put
> call
>
> Dude, CRP is VERY easy. Don't skip that one. If
> you know the CAPM, then just add CRP to the Market
> Risk Premium in the CAPM equation. So if the
> market risk premium is 5% and CRP is 3%, then it
> adjusts like this:
>
> E = RFR + B(8%)
>
> Or if instead they give you the market return and
> RFR, it looks like this:
>
> E = RFR + B(Em - RFR + CRP)
>
> Don't give away points on that.

Sometimes to calculate the country risk premium from sctratch they will give you the standard deviations of the foreign country's bond and stock markets.