Financial Economists Struggle to Determine Key Rate for Investment Success
The equity premium is a crucial number in finance, showing how much risky stocks are expected to outperform safe investments like bonds. Despite its importance, there is no agreed-upon standard for this number among financial experts. This lack of consensus makes it challenging to make informed investment decisions using mainstream financial theories. Financial economists are unsure of the correct equity premium, leading to a scarcity of recommendations for a practical estimate.