Hi there,
Question on country premium and adding this to WACC. Aware that you can add a country premium to WACC to reflect the risk of doing business in a "riskier" country.
Say for your market risk premium, you use the returns from the index that is from the country you are valuing (e.g. Nigeria) - is it still correct to add a country premium ontop of this? My thinking is that the risk of the country would already be embedded within the index so there wouldn't be a need to add an additional country premium ontop of this.
Anyone know the correct answer to this?
Thanks
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