TIP577: Valuation Masterclass w/ Aswath Damodaran
We Study Billionaires - The Investor’s Podcast Network
Impact of Higher Interest Rates on Business Valuation
The equity risk premium is the excess return above the risk-free rate that investors charge for investing in stocks. Higher interest rates can lead to a higher discount rate, impacting the valuation of businesses. When the risk-free rate increases, investors may demand higher returns on stocks to compensate for the increased risk. This shift in interest rates can result in an adjustment in expected returns on investments and may bring more uncertainty, particularly if the rise is driven by inflation.
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