Industry Risk Premiums: How Do We Get There?

BVResearch Pro
Training Event Transcripts
February 27, 2015
R. James Alerding, CPA/ABV, ASA

Summary

The industry risk premium (IRP) is an integral part of the cost of capital in both the CAPM and BUM methods. In the CAPM, it is encapsulated in the beta, and, in the BUM, it is determined by other methods, including the use of the Duff & Phelps industry risk premiums included in its annual Valuation Handbook - Guide to Cost of Capital. What do you really know about the IRP and what it does or does not mean to your cost of capital and your ultimate value solution? Join Jim Alerding, valuation expert, for this webinar exploring the arcane world of IRPs, how they are determined and what they mean to you, the valuation analyst, as you determine your cost of capital. Are they valid as determined by using either the CAPM (beta) or the BUM (IRP tables from Duff & Phelps)? If not, what can the analyst do to determine the industry risk for inclusion in his or her cost of capital?
Industry Risk Premiums: How Do We Get There?
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