Prima de Riesgo del Mercado: Histórica, Esperada, Exigida e Implícita
[Equity Risk Premium: Historic, Expected, Required and Implied]
AbstractThe 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.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 14221.
Date of creation: 23 Mar 2009
Date of revision:
equity premium puzzle; required equity premium; historical equity premium;
Find related papers by JEL classification:
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
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- Ivo Welch, 2001. "The Equity Premium Consensus Forecast Revisited," Cowles Foundation Discussion Papers 1325, Cowles Foundation for Research in Economics, Yale University.
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