Re-assessing the Equity Risk Premium
dc.contributor.author
FitzGerald, Adrian
en
dc.date.accessioned
2007-08-14T14:41:27Z
dc.date.available
2007-08-14T14:41:27Z
dc.date.issued
1997
dc.description.abstract
Estimates of the historical equity risk premium in the UK are in the range 7 per cent to 9 per cent per annum. Until recently, portfolio investors and industrialists have been encouraged to use a premium of this order in making investment decisions. The purpose of this paper is to review the risk premium debate and to re-inforce the case for rejecting historical experience in formulating future investment plans. A simulation of historical investor expectations suggests that a disciplined appraisal would have identified an average risk premium of less than two per cent per annum. A forward-looking assessment of reasonable expectations suggests that a risk premium assumptions of around 2.5 per cent would be realistic at present.
en
dc.format.extent
86852 bytes
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dc.format.mimetype
application/pdf
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dc.identifier.uri
http://hdl.handle.net/1842/1856
dc.language.iso
en
dc.publisher
Management School and Economics. The University of Edinburgh
en
dc.relation.ispartofseries
CFMR
en
dc.relation.ispartofseries
97.06
en
dc.subject
Economics
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dc.title
Re-assessing the Equity Risk Premium
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dc.type
Working Paper
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