Investor Glossary-equity risk premiumInvestor Glossary-equity risk premiumInvestor Glossary-equity risk premiumInvestor Glossary-equity risk premiumInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Equity Risk Premium

The HTML to link to this page
 

Equity risk premium is a premium return of the stock market that it above the rate of Treasury bills. By definition, equity risk premium offsets the overall market risk by providing the extra return over a risk free investment. In other terms, equity risk premium is a quantitative difference between the rate of return on stocks and Treasury bills. Equity risk premium figures are particularly important when it comes to risk determination and investment strategy. Thus, for instance, a higher equity risk premium would favor a stock oriented asset allocation. Calculating equity risk premium with great accuracy remains challenging. Professionals often employ a supply-side model to arrive at diligent equity risk premium parameters. The measure of equity risk premium may likewise be applied to individual stocks, not merely the overall market.



Rate this equity risk premium definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: in escrow, wholly-owned subsidiary, risk management, phantom income, class C shares, deferred tax, minority interest, 1031 exchange, command economy, stock market close, VIX, 144a, average price per share, cancelled check, deferred revenue, 401a, 1035 exchange, EBITDA, required rate of return, debt service coverage, option premium, current ratio, margin rate, open position, limit order, reverse mortgage, FICO score, Zero Cost Collar, covered put, ex-dividend, FTSE, real GDP, liquidity ratio, LIBOR, labor relations, balance sheet, implied volatility, Key Rate Duration, irrevocable trust, diluted share, quality assurance, retained earnings, stock split, inflation, APR, ex-dividend date, dividends payable, annual return, per diem


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use