Prima de Riesgo del Mercado: Histórica, Esperada, Exigida e Implícita

Equity Risk Premium: Historic, Expected, Required and Implied

Pablo Fernandez

MPRA Paper from University Library of Munich, Germany

Abstract: The equity premium (also called market risk premium, equity risk premium, market premium and risk premium), is one of the most important, discussed but elusive parameters in finance. The term equity premium is used to designate four different concepts (although many times they are mixed): Historical Equity Premium (HEP), Expected Equity Premium (EEP); Required Equity Premium (REP) and Implied Equity Premium (IEP). It has been argued that, from an economic standpoint, we need to establish the primacy of the EEP, since it is what guides investors' decisions. However, the REP is more important for many important decisions, among others, valuations of projects and companies, acquisitions, and corporate investment decisions. The EEP is important only for the investors that hold the market portfolio.

Keywords: equity premium puzzle; required equity premium; historical equity premium (search for similar items in EconPapers)
JEL-codes: G10 G12 G31 (search for similar items in EconPapers)
Date: 2009-03-23
New Economics Papers: this item is included in nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Universia Business Review 21 (2009): pp. 56-65

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/14221/1/MPRA_paper_14221.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14221

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().