Hi,
Read an ACCA article - CAPM part 1
There is a statement that says research has concentrated to find the equity risk premium than expected market return (this means, may be the premium is easy to find than market return)
i wonder how true is that ?
I understand this will not be asked in the exam, but just curious to know.
Thank you.
Ask the Tutor ACCA FM
Market risk premium
5y ago#1It is true and is because it is the market premium over the risk free rate that is relevant in the CAPM formula. When calculating it over a period then both the market return and the risk free rate both change from day-to-day and so it makes more sense to concentrate on the market premium.
Now it makes sense. Thank you
5y ago#3You are welcome :-)
This topic is locked — no new replies.