Damodaran: Discount Rates and Betas

Source:

The data for Damodaran: Discount Rates and Betas, provided by Professor Aswath Damodaran of NYU Stern School of Business, comes from a combination of publicly available financial sources and proprietary calculations. Here’s a detailed breakdown:

Primary Data Sources for Discount Rates and Betas
1. Market and Financial Data Providers

Damodaran’s calculations use publicly available and subscription-based market data from sources such as:

• Bloomberg
• S&P Global
• Value Line
• Yahoo! Finance
• Government bond yield data (e.g., U.S. Treasury rates)

2. Company Financial Statements

• Financial statement information is sourced from:
• Publicly traded company filings (e.g., 10-Ks, 10-Qs)
• Data aggregators compiling public company financials

3. Equity Market Indices

Betas are calculated relative to broad market indices such as:

• The S&P 500 (for U.S. companies)
• Global indices (for international firms)

Calculation Methodology

Discount Rates:

The risk-free rate typically comes from current government bond yields (e.g., 10-year U.S. Treasury).

The equity risk premium (ERP) is based on Damodaran’s own implied and historical ERP models, which use:

• Forward-looking market data
• Dividend and earnings growth forecasts
• Historical stock market performance

Betas:

Unlevered and levered betas are calculated using:

• Regression analysis of historical stock returns against market returns
• Adjustments for capital structure (debt/equity mix)
• Industry-average betas are computed by averaging betas for companies within specific industries or sectors.

Global Coverage

Damodaran provides betas, risk premiums, and discount rate inputs for:

• The U.S.
• Emerging markets
• Developed international markets

These estimates are widely used for academic research, business valuation, and corporate finance modeling.

You can access Aswath Damodaran’s datasets, models, and valuation resources for free on his official NYU Stern School of Business faculty webpage.