March 23, 2012
Tokyo American Club
7 p.m. Registration and Cocktails
7:30 p.m. Presentation
8:30 p.m. Networking and Cocktails
9:30 p.m. Event concludes
Discount Rates: Understanding Today's Financial Markets
John H. Cochrane, AQR Capital Management Distinguished Service Professor of Finance, Chicago Booth
Professor Cochrane will give a talk based on his recent article "Discount Rates" in the Journal of Finance.
Cochrane explains: "Discount-rate variation is currently the central organizing question of asset-pricing research. Previously, we thought returns were unpredictable, and variation in asset values corresponded to changes in expected cashflows. Now it seems all valuation changes correspond to discount-rate variation. We thought that the cross-section of expected returns was described by the capital asset pricing model. Today, the alpha-beta distinction is falling apart in a menagerie of 'exotic betas.' The financial crisis really was about a big rise in risk premiums - discount rates. Recognizing discount-rate variation dramatically changes finance applications, including portfolio theory, accounting, capital structure, compensation, and macroeconomics."