Total Equity Risk Premium Assignment
February 19th, 2020
a) General Motors, an American company, reported that it derived 50% of its revenue from Mexico and the rest from US market. Given that Mexico’s equity risk premium is 20% and mature market equity risk premium is 5%, estimate the total equity risk premium for General Motors using operation-based approach. (4 marks)
b) Estimate the risk-free is Brazilian Reais (BR) based on the following information:
Brazilian government bond rate in BR: 7.7%.
CDS Spread for Brazil (4.0%)
CDS Spread for US (0.5%)
CDS Spread for Argentina (4.5%) (4 marks). Get Finance homework help today