The Market Price of Risk: Quantifying a COVID-19 Equity Risk Premium Using High-Yield Bond Pricing

Business Valuation UpdateVol. 26 No. 7
July 2020
Mark A. Orndorff, CFA, ASA
Matthew L. Jakes, CFA, ASA

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cost of capital
equity risk premium, risk analysis, cost of equity, company specific risk, coronavirus, COVID-19

Summary

The authors demonstrate how a high-yield option-adjusted spread is used when doing appraisals of private companies while considering the market volatility and economic slowdown caused by the COVID-19 pandemic.