Investors' decisions are largely influenced by the riskiness of the country. Several different approaches are available to calculate this risk, but even so, the values set by Damodaran are usually used, even for non-US states. The aim of the paper is to propose a methodology for creating a risk premium in the environment of the Czech Republic and then compare it with Damodaran [1]. Methods applicable in the Czech Republic and Damodaran methods are used, then these methods are compared. For Czech as well as foreign investors, the easiest way to obtain a risk premium is to use the company’s investment rating. In the case of determining the risk premium of the Czech Republic, the easiest method is the CRP (country risk premiums) model. If the country’s market does not have a long history or does not have such a developed capital market, it is recommended to apply data from the US capital market. However, there are significant differences in the economy between Europe and the USA, so the data of an European country such as Germany, which has historical risk premium calculations, should be used.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.