Hi,
I have to value a company in CHF. Can I use the implied equity premiums from the US as a proxy for my risk premiums if I assume that equities in both countries are similiary exposed to risk? Or will I mess something up with expected inflation? I know that I do have to use a Swiss givernment as a proxy for my risk-free rate.
Thanks.

At vero eos et accusamus et iusto odio dignissimos ducimus qui blanditiis praesentium voluptatum deleniti atque corrupti quos dolores et quas molestias excepturi sint occaecati cupiditate non provident, similique sunt in culpa qui officia deserunt mollitia animi, id est laborum et dolorum fuga.
Et harum quidem rerum facilis est et expedita distinctio. Nam libero tempore, cum soluta nobis est eligendi optio cumque nihil impedit quo minus id quod maxime placeat facere possimus, omnis voluptas assumenda est, omnis dolor repellendus.
Itaque earum rerum hic tenetur a sapiente delectus, ut aut reiciendis voluptatibus maiores alias consequatur aut perferendis doloribus asperiores repellat.

Get our expert's

answer on brainly

SEE EXPERT ANSWER

Get your **free** account and access **expert** answers to this

and **thousands** of other questions.

- anonymous

- schrodinger

I got my questions answered at brainly.com in under 10 minutes. Go to brainly.com now for free help!

Get this expert

answer on brainly

SEE EXPERT ANSWER

Get your **free** account and access **expert** answers to this

and **thousands** of other questions

- anonymous

It should work, since the riskfree rates are close. If they were not, here is the solution. Compute the cost of equity in US dollar terms. Then convert into another currency by doing the following:
(1+ US$ Cost of equity) (1+ Exp inflation rate in Currency)/ (1+ Exp inflation in US$)

- anonymous

I don’t understand the answer Aswath, suppose that cost of equity in US is 15% and the Exp inflation rate in currency is 1.2%, and exp inflation of US is 2%, applying your formula you get:
(1+15%)*(1+1.2)/(1+2%) = 114.10%

- anonymous

Isn’t better to convert in this form:
(1+US$ Cost of Equity)*(1+Exp devaluation)-1?
Thanks

Looking for something else?

Not the answer you are looking for? Search for more explanations.

## More answers

- anonymous

Some people use [(1+ Exp inflation rate in Currency)/ (1+ Exp inflation in US$)-1] to calculate devaluation, so in your formula you only forgot to substract 1... am i right?

Looking for something else?

Not the answer you are looking for? Search for more explanations.