Solving fortheThaiinterestrate yieldsa 10-yearrisk-free
rate of 10.12 percent.
9 Ratingsagenciesgenerallyassigndifferentratingsforlocal
currency borrowings and dollar borrowing, with higher
ratings for the former and lower ratings for the latter.
10 See“Stocks,Bonds,BillsandInflation,”anannualedition
thatreportsontheannualreturnsonstocks,Treasurybonds,
andTreasurybills,aswellasinflationratesfrom 1926 tothe
present (www.ibbotson.com).
11 Forthehistoricaldataonstockreturns,bondreturns,and
bill returns, check under “updated data” in
http://www.stern.nyu.edu/~adamodar.
12 These estimates of the standard error are probably
understated becausethey arebased ontheassumption that
annualreturnsareuncorrelatedovertime.Thereissubstantial
empirical evidence that returns are correlated over time,
which would make this standard error estimate much larger.
13 Thecompoundedreturniscomputedbytakingthevalueof
theinvestment atthe startof the period(Value 0 ) and the
value at the end (ValueN) and then computing the following:
14 Inotherwords,goodyearsaremorelikelytobefollowed
bypooryearsandviceversa.Theevidenceonnegativeserial