Market Risk Premium Used in 2010 by Professors: A Survey with 1,500 Answers

15 Pages Posted: 16 May 2010 Last revised: 17 May 2010

See all articles by Pablo Fernandez

Pablo Fernandez

University of Navarra - IESE Business School

Javier del Campo Baonza

affiliation not provided to SSRN

Date Written: 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.

Keywords: market risk premium, required equity premium, expected equity premium, historical equity premium

JEL Classification: G12, G31, M21

Suggested Citation

Fernandez, Pablo and del Campo Baonza, Javier, Market Risk Premium Used in 2010 by Professors: A Survey with 1,500 Answers (May 13, 2010). Available at SSRN: https://ssrn.com/abstract=1606563 or http://dx.doi.org/10.2139/ssrn.1606563

Pablo Fernandez (Contact Author)

University of Navarra - IESE Business School ( email )

Camino del Cerro del Aguila 3
28023 Madrid
Spain
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)

HOME PAGE: http://web.iese.edu/PabloFernandez/

Javier Del Campo Baonza

affiliation not provided to SSRN ( email )

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