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What is te current Mark Risk Premium?
I have a file that says -0.0269 but that seems very low.
1 Answer
- ?Lv 78 years agoFavorite Answer
1. To me also, the figure makes no sense. By definition, the market risk premium should be positive.
2. The 'Market Risk Premium' is the difference between the expected return on a market portfolio and the risk-free rate. Market risk premium is equal to the slope of the security market line (SML), a capital asset pricing model.
3. Three distinct concepts are part of market risk premium:
1) Required market risk premium: the return of a portfolio over the risk-free rate (such as that of treasury bonds) required by an investor;
2) Historical market risk premium: the historical differential return of the market over treasury bonds; and
3) Expected market risk premium: the expected differential return of the market over treasury bonds.
http://www.investopedia.com/terms/m/marketriskprem...
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Source(s): As Above . .
