Financial economics

Financial economics operates at the heart of business and the markets which supply capital. It helps to determine where and how to invest scarce capital in the most effective manner and then provides the tools to help manage those investments and make value enhancing decisions.

Our team provides practical, evidence based solutions that combine traditional financial economics with strong quantitative skills, fluency in finance, and in-depth industry expertise, to provide expert analysis, evidence and testimony.  We work with our clients to help them:

  • Work out the cost of capital and appropriate investment hurdle rates
  • Value businesses more accurately
  • Understand and price risks more effectively
  • Assess a sensible level of debt to finance a business

Our unrivalled experience of advising companies and regulators over the past 10 years has culminated with the publishing of our book The Real Cost of Capital which describes the key issues in understanding and using the cost of capital today, taking principles from the world of managerial finance and putting them into the context of major investment decisions.

An example of our research into recent issues in the application of financial economics is the concept of country risk. Country Risk has come increasingly into the spotlight over the last few years as events such as the the Eurozone crisis, Arab Spring and the US fiscal crises have defined the business environment. For our latest analysis into country risk trends over the last quarter, see our interactive Country Risk Map.