Bonduelle: Discriminating the weighted average cost of capital(Europe and non-Europe zones)

Bonduelle aims to determine the discount rate to evaluate its investments in emerging countries gives rise to many measurement problems, including the risks to be taken into account and the availab ...

Author(s):

Elie Salameh

EDHEC Business School

Bonduelle aims to determine the discount rate to evaluate its investments in emerging countries gives rise to many measurement problems, including the risks to be taken into account and the availability of statistical data in these countries. Where such data are available, they are not always available over a sufficiently long period, and very rarely based on liquid markets.
There is an abundance of literature on the benefits of international diversification, but this literature responds partially to the questions of practitioners. First, financial theory finds it difficult to integrate all financial risks (currency, economic, political, etc.) into one model in order to determine a country's risk premium. Second, research in finance does not always have reliable measures of risk in many countries, which limits transition-to-practice initiatives.
In most emerging countries, economic risk measures based on the volatility of local stock exchanges are not completely reliable. In this context, the case aims to provide a simplified approach for the determination of the country risk premium through the sovereign spread.

Type: Case Study
Date: le 01/09/2017
Research Cluster : EDHEC Family Business Centre

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