Question
India's sovereign bond rating was Baa3 in 2013, implying a default spread of 2%.The Indian government issue 10-year bonds at that time in rupees, with
India's sovereign bond rating was Baa3 in 2013, implying a default spread of 2%.The Indian government issue 10-year bonds at that time in rupees, with a yield of 6.25%. The US Equity Risk Premium was 5.5%.The standard deviation of Indian stock market was 18%, and the standard deviation of its government bond was 9%.
What is the Equity Risk Premium for India adjusted for relative riskiness of stock market relative to the bond market?
What is the cost of equity for a 100% Indian company with a beta of 1.08 to the Indian stock market.
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Investments Analysis and Management
Authors: Charles P. Jones
12th edition
978-1118475904, 1118475909, 1118363299, 978-1118363294
