The Equity Risk Premium on the Swedish Stock Market
2011 (English)Report (Other academic)
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.
Equity Risk Premium
IdentifiersURN: urn:nbn:se:kth:diva-70291OAI: oai:DiVA.org:kth-70291DiVA: diva2:486164
QC 201502182012-01-302012-01-302015-02-18Bibliographically approved