The Duff & Phelps, LLC Risk Premium Report 2008 has just been released, providing updated risk premium data based on average returns through December 31, 2007. As in prior years, the Report presents data on rates of return related to company size and fundamental company risk. The size portion provides data categorized by two market-value-based measures and six “fundamental” or accounting-based measures; the risk portion analyzes data against the three fundamental measures of business risk—operating margin, variability of operating margin, and variability of return on invested capital.
New this year: The Report discusses the use of its data in conjunction with industry risk premia reported in the Ibbotson® SBBI® Valuation Yearbook (Morningstar) and provides examples. The 2008 Report is available through BVResources. In addition, the next issue (May 2008) of the Business Valuation Update™ will publish the Duff & Phelps’ 2008 premiums over long-term risk-free rates in its monthly “Cost of Capital” feature.
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