Equity risk premium is the excess return that investing in the stock market provides over a risk-free rate. This excessreturncompensates investors for taking on the relatively higher risk of equity investing. The size of the premium varies and depends on thelevel of riskin a particular portfolio...
understanding and making practical use of the equity risk premium concept has been dauntingly complex-until now.In The Equity Risk Premium, financial advisor, author, and scholar Bradford Cornell makes accessible for the first time an authoritative explanation of the equity risk premium and how it ...
The Equity Risk Premium Controversy The equity risk premium controversy is a puzzle with implications for investors and money managers. Whatever the arguments about a high equity risk premium in the past, there has been a substantial premium over time on average, although ... CP Jones,JW Wilson...
Why Does the Equity Risk Premium Matter? The equity risk premium helps to setportfolio returnexpectations and determineasset allocation. A higher premium implies that you would invest a greater share of your portfolio into stocks. The capital asset pricing model also relates a stock'sexpected return...
Equity risk premium is the difference between returns on equity/individual stock and the risk-free rate of return.
that indicate a strong similarity between the behavior of excess returns in the two markets when modeled as risk premiums, providing empirical grounds to believe that the proposed preference-based solutions to puzzles in domestic ...nancial markets can certainly shed light on the Forward Premium ...
Theequity risk premiumis the difference between therate of returnof a risk-free investment and the geometric mean return of an individual stock over the same time period. Since all investments carry varying degrees of risk, the equity risk premium is a measure of the cost of that risk. ...
An additional puzzle — the risk-free rate puzzle — emerges instead: why is the risk-free rate so low if agents are so averse to intertemporal substitution? 展开 关键词: CiteSeerX citations The equity premium puzzle and the risk-free rate puzzle Philippe Weil ...
Utilising a VAR-GARCH-in-mean process to generate conditional variances, we find evidence to support the time varying, risk-premium hypothesis. Moreover, our evidence shows that the volatility evolution of stock returns displays not only a clustering phenomenon, but also a significant spillover ...
No equity risk premium model would have predicted such a jump, but this jump does not invalidate the model. It was caused largely by phenomena that cannot be sustained over the long haul: a 17% increase in the combinedforward EPS(i.e., EPS estimates for four futurequarters) and an almost...