Musings on Markets

FEBRUARY 8, 2025

I spend most of my time in the far less rarefied air of corporate finance and valuation, where businesses try to decide what projects to invest in, and investors attempt to estimate business value. A key tool in both endeavors is a hurdle rate a rate of return that you determine as your required return for business and investment decisions.

Hurdle Rate 72

Hurdle Rate Valuation Corporate Finance Currencies 72

Musings on Markets

FEBRUARY 10, 2021

What is a hurdle rate for a business? In this post, I will start by looking at the role that hurdle rates play in running a business, with the consequences of setting them too high or too low, and then look at the fundamentals that should cause hurdle rates to vary across companies. What is a hurdle rate?

Hurdle Rate 52

Hurdle Rate Currencies Investments Valuation 52

CFO News Room

JANUARY 20, 2023

In my last point on inflation, I noted that a currency with higher inflation can be expected to depreciate over time against a currency with lower inflation. That expected devaluation in the high-inflation currency is not risk, though, since it can and should be incorporated into your forecasts.

Hurdle Rate 130

Hurdle Rate Currencies Investments Corporate Finance 130

Musings on Markets

FEBRUARY 8, 2022

In my last point on inflation, I noted that a currency with higher inflation can be expected to depreciate over time against a currency with lower inflation. That expected devaluation in the high-inflation currency is not risk, though, since it can and should be incorporated into your forecasts.

Hurdle Rate 90

Hurdle Rate Currencies Investments Corporate Finance 90

Musings on Markets

AUGUST 15, 2023

I was reminded of that paper a few weeks ago, when Fitch downgraded the US, from AAA to AA+, a relatively minor shift, but one with significant psychological consequences for investors in the largest economy in the world, whose currency still dominates global transactions. and the reverse will occur, when risk-free rates drop.

Investments 98

Investments Currencies Treasury Hurdle Rate 98

Musings on Markets

JANUARY 5, 2024

That year, I computed these industry-level statistics for five variables that I found myself using repeatedly in my valuations, and once I had them, I could not think of a good reason to keep them secret. Valuation Pricing Growth & Reinvestment Profitability Risk Multiple s 1. Insider, CEO & Institutional holdings 2.

Valuation 105

Valuation Financial Analysis Analyzing Data Profit and Loss 105

Musings on Markets

JANUARY 9, 2021

To illustrate, consider a practice in valuation, where analysts are trained to add a small cap premium to discount rates for smaller companies, on the intuition that they are riskier than larger companies. It is true that the Turkish company will face more risk because of its location, but that is an issue separate from currency.

Valuation 52

Valuation Currencies Numbers Corporate Finance 52