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Yeah I think its the risk free rate + everything. Remember there is no beta applied in this one though.
Posted above me has it right… I think they will try to tempt you with a CAPM beta of some sort. Don’t fall for it!
You use the full equity risk premium, the risk free rate and any other premium they give you (liquidity, small cap, whatever)…
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Fama French is only Small Cap Premium and Book to Market premium… nothing else. (And yes you use a beta for FF)
Build up can be anything they give you. The build up is alternative to using Betas, so therefore you don’t use one :).
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Yes, that is what I meant… sorry I re-read my post and it looks like I meant you didn’t have RFR or Beta x ERP… your formulas are good!
Watch out for that trap where they give u liquidity prem and ask for FF build up