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The equity risk premium calculation based on European data
[Výpočet rizikové prémie kapitálového trhu na základě evropských dat]

Author

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  • Jan Marek

Abstract

The article focuses on estimating the equity risk premium when valuing companies located in the Czech Republic and other European countries with comparable risk profiles. It highlights key challenges associated with traditional data sources, particularly from the U.S. market, which may lead to distorted estimates. The article presents a calculation of the implied equity risk premium based on current data from European companies with similar risk characteristics. This calculation, performed using the bottom-up approach, eliminates the need for additional premiums for country risk and company size. Estimates of the implied equity risk premium for large and mid-sized companies are regularly updated and published on the European Valuation Institute website (www.evalin.org).

Suggested Citation

  • Jan Marek, 2025. "The equity risk premium calculation based on European data [Výpočet rizikové prémie kapitálového trhu na základě evropských dat]," Oceňování, Prague University of Economics and Business, vol. 18(1), pages 33-46.
    • Handle: RePEc:prg:jnloce:v:18:y:2025:i:1:id:299:p:33-46
    DOI: 10.18267/j.ocenovani.299
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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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