Session 4: The Big Picture of DCF and Riskfree Rates

We started the class by completing a big picture perspective on discounted cash flow models, noting that while the way we get cash flows, growth rates and discount rates will vary, they are not only tied together with the same principles but require internal consistency. We started then with a discussion of risk and how it plays out in discount rates, before embarking on an assessment of riskfree rates, and why they vary across currencies and what to do about really low or negative risk free rates. The blog post below captures my thoughts on negative risk free rates: http://aswathdamodaran.blogspot.com/2... If you want to see my updated perspective on risk free rates, try my blog post from last week: https://aswathdamodaran.blogspot.com/... Some of this post covers what we will do next week in class, but it is still a good big picture perspective. Start of the class test: https://www.stern.nyu.edu/~adamodar/p... Slides: https://www.stern.nyu.edu/~adamodar/p... Post class test: https://www.stern.nyu.edu/~adamodar/p... Post class test solution: https://www.stern.nyu.edu/~adamodar/p...