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The Equity Risk Premium on the Swedish Stock Market
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.).ORCID iD: 0000-0001-7402-0096
2011 (English)Report (Other academic)
Abstract [en]

The equity risk premium is a very important part of every valuation. When valuing a company you have to decide on the level of the equity risk premium. The decision influences the value to great extent. To aid in that decision we estimate the equity risk premium on the Swedish stock market by three methods. Our estimates cover the period 1919-2010. The historical equity risk premium for 1919 – 2009 is on average 5.9 percent (arithmetic) per year and 3.3 percent (geometric) per year. The survey data for 2010 is 4.6 percent and the implied equity risk premium for 2008 is 2.1 percent. We use the 10-year governmental bond yield as risk-free interest rate. Our conclusion is that, referring to survey data, the equity risk premium to use in a valuation of a Swedish company 2010 should be around 4.5 percent.

Place, publisher, year, edition, pages
KTH Royal Institute of Technology, 2011. , 90 p.
Keyword [en]
Equity Risk Premium
National Category
Social Sciences
URN: urn:nbn:se:kth:diva-70291OAI: diva2:486164

QC 20150218

Available from: 2012-01-30 Created: 2012-01-30 Last updated: 2015-02-18Bibliographically approved

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Sörensson, Tomas
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Industrial Economics and Management (Dept.)
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ReferencesLink to record
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