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Market risk premium used in 2010 by professors: A survey with 1,500 answers

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Author Info

  • Fernandez, Pablo

    ()
    (IESE Business School)

  • del Campo, Javier

    (IESE Business School)

Abstract

The average Market Risk Premium (MRP) used in 2010 by professors in the United States (6.0%) was higher than the one used by their colleagues in Europe (5.3%). We also report statistics 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.

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Bibliographic Info

Paper provided by IESE Business School in its series IESE Research Papers with number D/911.

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Length: 25 pages
Date of creation: 05 Mar 2011
Date of revision:
Handle: RePEc:ebg:iesewp:d-0911

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Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
Web page: http://www.iese.edu/
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Related research

Keywords: equity premium puzzle; required equity premium; expected equity premium; historical equity premium;

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Cited by:
  1. Michalsky, Grzegorz, 2012. "Crisis Caused Changes in Intrinsic Liquidity Value in Non-Profit Institutions," MPRA Paper 43397, University Library of Munich, Germany, revised 19 Dec 2012.
  2. Tor Brunzell & Eva Liljeblom & Mika Vaihekoski, 2013. "Determinants of capital budgeting methods and hurdle rates in Nordic firms," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(1), pages 85-110, 03.
  3. Grzegorz Michalski, 2012. "Crisis Caused Changes in Intrinsic Liquidity Value in Non-Profit Institutions," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 7, pages 139-158.
  4. Grzegorz Michalski & Aleksander Mercik, 2013. "Polish and Silesian Non-Profit Organizations Liquidity Strategies," Papers 1301.3825, arXiv.org.

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