Abstract
In most emerging market valuations a country risk premium is added to the CAPM discount rate of an equivalent investment in a developed market. However, this is not only a flawed procedure but also it is extremely difficult to gauge how country risk might affect the discount rate. In this paper a practical method is proposed to appraise country risk mainly through its impact on projected cash flows, leaving its possible effect on the discount rate as a secondary consideration.
| Original language | English |
|---|---|
| Pages | 50-63 |
| Specialist publication | GCG: Revista de Globalización, Competitividad y Gobernabilidad = GCG: Journal of Globalization, Competitiveness and Governability = GCG: Revista de Globalização, Competitividade e Governabilidade |
| Publication status | Published - 1 Dec 2008 |
| Externally published | Yes |