أنشئ حسابًا أو سجّل الدخول للانضمام إلى مجتمعك المهني.
agree with the answer given by shahbaz hayder.
Market risk premium is also known as equity risk premium. It represents the additional compensation, on average, for taking the risk of equities rather than buying treasury bills.
It can be calculated by using the following formula:
Market Risk Premium = Expected Return of the Market – Risk Free Rate of Return
For example, if the interest rate on Treasury bonds is4% and the Stocks return is9%, the equity risk premium will be5%.
The equity risk premium is used in the capital asset pricing model (CAPM) to establish the valuation of invested shares in a diversified portfolio.
Not relevant to my specialties.
