“In regard to estimating the required rate of return for the South African and Canadian equity markets,” Kim says, “I believe the most important adjustments will be:
- accounting for differences in GDP growth rates,
- incorporating exchange rate forecasts into the calculations, and
- including a country premium for stocks in South Africa.”
Which of Kim’s suggested adjustments when comparing the required rates of return for South African and Canadian stocks is least relevant? The adjustment related to:
- the country premium.
- exchange rate forecasts.
- GDP growth rates. answer is 2. can someone please explain how in the world gdp growth cannot be important? and why exchange rate forecasts? this is making no sense to me.