IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/14221.html
   My bibliography  Save this paper

Prima de Riesgo del Mercado: Histórica, Esperada, Exigida e Implícita
[Equity Risk Premium: Historic, Expected, Required and Implied]

Author

Listed:
  • Fernandez, Pablo

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.

Suggested Citation

  • Fernandez, Pablo, 2009. "Prima de Riesgo del Mercado: Histórica, Esperada, Exigida e Implícita
    [Equity Risk Premium: Historic, Expected, Required and Implied]
    ," MPRA Paper 14221, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14221
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/14221/1/MPRA_paper_14221.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Ivo Welch, 2001. "The Equity Premium Consensus Forecast Revisited," Cowles Foundation Discussion Papers 1325, Cowles Foundation for Research in Economics, Yale University.
    2. James Claus, 2001. "Equity Premia as Low as Three Percent? Evidence from Analysts' Earnings Forecasts for Domestic and International Stock Markets," Journal of Finance, American Finance Association, vol. 56(5), pages 1629-1666, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    equity premium puzzle; required equity premium; historical equity premium;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • 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)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:14221. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.