The Annual Survey of Professor Pablo Fernandez: Market Risk Premium and Risk-Free Rate 2015

This year I was included in the Annual Survey of Prof. Fernandez on market risk premium and risk-free rate. I found the papers of Prof. Fernandez in SSRN ten years ago. I was fascinated by his critical, restrained, wise, and unbiased view on valuation. I like his style on valuation more than that of Prof. Damodaran. I read Investment Valuation in 1997. It took me a week and I liked it. I could not believe that valuation is so easy and funny. I am grateful to prof. Damodaran but I keen on the Spanish & LatAm School on Valuation leaded by Fernandez, Estrada, Rojo-Ramirez, Montalvan, Sarrio, Canadas, Sabal, and Pereiro when it comes to valuation in emerging markets.

In my practice as a business consultant and university professor, I use the CreditSuisse Global Investment Returns Yearbook as a main source of market risk premium data. There are three reasons for this: (1) the methodology behind the Yearbook is rigorous. It is based on the work of Dimson, Marsh, and Staunton(2002); (2) The Credit Suisse Research Institute updates the Yearbook annually; (3) it covers the most important developed and emerging markets; and (4) it is free of charge. Regarding the risk premium of the Bulgarian stock market, I developed a simple methodology for historical market risk premium calculation.