Equity risk premium: The second corner is the equity risk premium, which is the premium that investors demand for investing in stocks as compensation for exposure to macroeconomic risk, i.e., uncertainty about real economic growth and inflation. Holding all else constant, a lower equity risk pre...
Damodaran and Lim (1991) examined the effect of option securities on the returns of 200 companies with options from 1973–1983 [69]. The study found that the options trading reduces the volatility of underlying stocks where the prices were adjusted much more quickly to new information. Easley ...
Damodaran and Lim (1991) examined the effect of option securities on the returns of 200 companies with options from 1973–1983 [69]. The study found that the options trading reduces the volatility of underlying stocks where the prices were adjusted much more quickly to new information. Easley ...