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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | 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