Question
Your model forecasts a market standard deviation of 20% for the following year. Using the risk aversion equation: A = E(r_m) (r_f) / (var(m)) Where
Your model forecasts a market standard deviation of 20% for the following year. Using the risk aversion equation:
A = E(r_m) (r_f) / (var(m))
Where A=4; r_m = market return; r_f = risk-free rate; var(m) is the variance of the market
What is the markets risk premium?
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Personal Finance An Integrated Planning Approach
Authors: Ralph R Frasca
8th edition
136063039, 978-0136063032
