International Considerations and Real Required Return
In the curriculum, it says that when we evaluate non domestic stocks, often we need to make industry, size and leverage adjustments to get the real required return. However, what if we have the required return and just add the country risk premium. Would that be considered ok too hypothetically?
In the exam, would the signs for each adjustment be given? I am trying to understand the logic.
For example if we invest in a small and leveraged firm, does it mean that we need to add for both of these two adjustments to get the real return?
Whats the interpretation for industry adjustment in this case?
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