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Market Risk Premium - Market Risk Premium is important, but the elusive parameters in finance. It is the equity premium, the market premium and the risk premium. The term market risk premium is difficult to understand because used to designate three different concepts. It is required market risk premium. It is the historical market risk premium. It is expected market risk premium. Many finance practitioners assume that the expected market risk premium is equal to the historical market risk premium and to the required market risk premium. The CAPM presuppose that the required market risk premium is equal to the expected market risk premium. |