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To: AK2004 who wrote (151321)	12/6/2001 1:22:03 PM
From: wanna_bmw	Respond to of 186894

albert re: The point is not that the companies take risks but rather that they are consistent in their risk preferences. In an ideal case the value of the company is a present value of it's distributable earnings. In risk neutral world one would use risk free (treasury) rate to discount those in order to get that present value (minor note: one can not just take expected cash flow and discount it since the performance is interest rate dependant). It is very hard to quantify risk premiums but it is easy to identify the direction of changes and hence potential impact on the value. I'm going to have to take your word for this, since it is outside the scope of my argument, and also of my current knowledge. Regards -BMW