--%>
Assignment Help - homework help

Is the market risk premium a parameter

Is the market risk premium a parameter, for the world economy or for the national economy?

E

Expert

Verified

No. This risk premium is the return differential (above the return which can be acquired by investing in government bonds) which an investor needs for stock market investment. This is not a characteristic parameter of an economy as everyone has his own risk premium. The average market risk premium value is unknown and this cannot be considered as being the one of a representative investor.

   Related Questions in Corporate Finance

  • Q : What are the different types of

    What are the different types of mathematics found in quantitative finance?

    		•
  • Q : What is Regular meeting of day-to-day

    Regular meeting of day-to-day commitments: The estimation of WCR also helps to ensure that there is positive WC existence. This proves helpful in meeting requirements which are regular in nature such as payments of salaries, wages, rental charges etc.

    		•
  • Q : Problem on leveraged beta AB

    AB Restaurants has debt/equity ratio .25, and its leveraged beta is 1.5. Its tax rate is 30%, and its cost of equity is 15%. The risk-free rate is 5%. CD Restaurants has debt/equity ratio .4, and tax rate 35%. Find the cost of equity for CD.

    		•
  • Q : In which cases use different WACCs Is

    Is this possible to use different WACCs within order to discount each year’s flows? In which cases?

    		•
  • Q : Explain essential hypotheses for

    Which are the essential hypotheses so that valuations of the Economic Value Added (EVA) give similar results to discounting cash flows?

    		•
  • Q : How WACC should be computed to begin a

    I cannot seem to begin a valuation. In order to compute E + D = VA (FCF; WACC) I require the WACC and to compute the WACC I need D and E. Where must I start?

    		•
  • Q : Explain reasonable things to do is to

    The reasonable thing to perform is to finance current assets that are collections and inventories etc. with short-term debt and fixed assets along with long-term debt. Is it correct?

    		•
  • Q : Is the market risk premium a parameter

    Is the market risk premium a parameter, for the world economy or for the national economy?

    		•
  • Q : Define Strong form market efficiency

    Strong form market efficiency: Strong form market efficiency defines that the price of a security in the market replicates all information—public and also private or within information. Strong form efficiency

    		•
  • Q : Is there any optimal capital structure

    Is there any optimal capital structure?

    		•