Market risk premium: Difference between revisions
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imported>Doug Williamson (Clarified that the "risk-free" asset is theoretical/hypothetical.) |
imported>Doug Williamson m (Spacing.) |
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But more strictly the market risk premium refers to the market of all traded assets, while the equity risk premium refers to equities only. | But more strictly the market risk premium refers to the market of all traded assets, while the equity risk premium refers to equities only. | ||
== See also == | == See also == | ||
Revision as of 12:23, 12 August 2013
(MRP).
In the Capital Asset Pricing Model, the additional return to investors who invest in the market portfolio - additional to the theoretical risk free rate of return - which compensates them for accepting an average market level of risk.
Also known loosely as the Equity Risk Premium (ERP).
But more strictly the market risk premium refers to the market of all traded assets, while the equity risk premium refers to equities only.
