Unlocking the Key to Estimating Equity Risk Premium for Investors
The article discusses different ways to estimate the equity risk premium, which is important in finance for calculating costs of equity and capital. The three main methods are surveying investors, looking at historical stock returns, and analyzing current market prices. The author focuses on the third method, called Implied Equity Risk Premium, which estimates the market's consensus on the premium. By using this method on real data, the author presents their findings on the equity risk premium.