LII I know (or maybe even LI) but Schweser Vol 2 has a question using DDM and it calculates k (the required return) as the long-term risk free rate plus the market risk premium For some reason I thought the risk-free rate used would be the T Bill rate - have I just forgotten the details?
As far as I know, its better to use long-term risk free rate because the cash flows used are long term ones for equity.
thanks AMC, my brain is stuffed with information I think parts of it have started to leak out on the floor. Note to self: use long-term bond rate for calculating k!
newsuper Wrote: ------------------------------------------------------- > thanks AMC, my brain is stuffed with information I > think parts of it have started to leak out on the > floor. > > Note to self: use long-term bond rate for > calculating k! Same here !