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Market Risk Premium Used in 2010 by Professors: A Survey with 1,500 AnswersPablo FernandezUniversity of Navarra - IESE Business School Javier Del Campo Baonzaaffiliation not provided to SSRN May 13, 2010 Abstract: The average Market Risk Premium (MRP) used in 2010 by professors in the USA (6.0%) was higher than the one used by their colleagues in Europe (5.3%). We also report the MRP used for 33 countries: the average MRP used in 2010 ranges from 3.6% (Denmark) to 10.9% (Mexico). 29% of the professors decreased the MRP in 2010, 16% increased it and 55% used the same MRP. The dispersion of the MRP used was high: the average range of MRP used by professors for the same country was 7.4% and the average standard deviation was 2.4%. Most previous surveys have been interested in the Expected MRP, but this survey asks about the Required MRP. The paper also contains the references that professors use to justify their MRP, and comments from 85 professors that illustrate the various interpretations of what is the required MRP.
Number of Pages in PDF File: 15 Keywords: market risk premium, required equity premium, expected equity premium, historical equity premium JEL Classification: G12, G31, M21 working papers seriesDate posted: May 16, 2010 ; Last revised: May 17, 2010Suggested CitationContact Information
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