@sniper11

Quantifying political risk premiums for offshore mining stocks involves assessing the additional return investors demand for political uncertainties. Start with the equity risk premium (ERP) for a mature market (e.g., 5-6% in the US). Adjust it using a country risk premium (CRP), calculated as the spread on sovereign bond yields multiplied by the ratio of equity-to-bond market volatility (e.g., CRP = Sovereign Spread × (Equity SD / Bond SD)). Incorporate geopolitical risk indices, like Caldara and Iacoviello’s GPR, to gauge event-driven volatility. Factor in mining-specific risks—resource nationalism, regulatory changes, or expropriation—using historical data or sector surveys (e.g., Fraser Institute). Combine these into a total risk premium: ERP + CRP + Mining-Specific Adjustment. Validate with market data, such as stock return correlations during political shocks. Regularly update for dynamic conditions.

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