New method reveals hidden stock market risks and opportunities!
The article presents a method to calculate the implied equity risk premium using dividend futures, which reflect future dividend expectations. By analyzing daily market data, the researchers were able to track changes in risk premium for the S&P 500 and Euro Stoxx 50 indices over the past decade. This approach helps break down stock price movements into different factors, considering shifts in interest rates and the impact of events like the Covid-19 pandemic.