关于财务报表三张表中最重要的。

I think i was thinking too much when asked abt this question. Cos I was concerning the reliability of EPS, which is likely to be distorted. And cash flow is less likely subject to distortion. Anyway, I understand. Thanks so much.

One more question everyone,

How do we select / determine the risk-free interest rate when performing DCF in China capital market?

In my opinion, it depends on the investment horizon and the "risk-free" investments readily available to the investors? So it could vary a lot? Right?

I just wanna know how analysts in chinese financial institutions determine this rate? seems no frequently used benchmark rate like treasury bond in the U.S.

http://www.tradingeconomics.com/ ... eld.aspx?Symbol=CNY

Thanks. But I want to raise the discussion about application of risk-free rate in practice.

I mean how to determine the rate? just apply 10 - year bond?

As you said it depends on your investment horizon. If you are a long-term investor like Warren Buffett, 10-year bond yield is a reasonable rate to use. In fact Warren Buffett likes to hold forever, so 30-year bonds would suit him better. But 99.9% of people I know have much, much shorter holding periods. If you look at other threads most people buy today and expect to make profit tomorrow. For them the risk-free rate would be interest rate on their savings accounts.   

You can use the current yield, or an average of historical yields. There is no definitive rule. Use whatever that makes sense to you.

ectopic 发表于 2010-7-14 11:57
As you said it depends on your investment horizon. If you are a long-term investor like Warren Buffett, 10-year bond yield is a reasonable rate to use. In fact Warren Buffett likes to hold forever, so 30-year bonds would suit him better. But 99.9% of people I know have much, much shorter holding periods. If you look at other threads most people buy today and expect to make profit tomorrow. For them the risk-free rate would be interest rate on their savings accounts.   

You can use the current yield, or an average of historical yields. There is no definitive rule. Use whatever that makes sense to you.

Thanks for your inputs. really insightful.

So relating to the equity premium should be the excess amt of market return over the risk-free rate, right? And one more thing, the beta? from an excerpt from morgan stanley's guidance, should apply forward-looking beta, instead of historical beta, which is retrieved from bloomberg. But I dunt know where to find the forward-looking beta for A-share listing companies.

Because no one knows the future, any "forward-looking" number is just an estimate. People usually make estimates from historical data. But no one can accurately forecast beta, not even Morgan Stanely.

没有重要与不重要之分，三者都很重要，最好对比使用……

现金为王