LCM of two numbers

Market Risk Premium Calculator

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Risk Management

✖Expected Equity Market Rate refers to the anticipated rate of return that investors expect to earn from investing in equities or stocks within a specific market.ⓘ Expected Equity Market Rate [EEMR]			+10% -10%
✖The Risk Free Rate is the theoretical rate of return of an investment with zero risks.ⓘ Risk Free Rate [R_f]			+10% -10%

✖Market Risk Premium is the rate of return on a risky investment.ⓘ Market Risk Premium [MRP]

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Market Risk Premium Solution

STEP 0: Pre-Calculation Summary

Formula Used

Market Risk Premium = Expected Equity Market Rate-Risk Free Rate
MRP = EEMR-R_f
This formula uses 3 Variables

Variables Used

Market Risk Premium - Market Risk Premium is the rate of return on a risky investment.
Expected Equity Market Rate - Expected Equity Market Rate refers to the anticipated rate of return that investors expect to earn from investing in equities or stocks within a specific market.
Risk Free Rate - The Risk Free Rate is the theoretical rate of return of an investment with zero risks.

STEP 1: Convert Input(s) to Base Unit

Expected Equity Market Rate: 19 --> No Conversion Required
Risk Free Rate: 0.3 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

MRP = EEMR-R_f --> 19-0.3

Evaluating ... ...

MRP = 18.7

STEP 3: Convert Result to Output's Unit

18.7 --> No Conversion Required

FINAL ANSWER

18.7 <-- Market Risk Premium

(Calculation completed in 00.004 seconds)

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Credits

Created by Kashish Arora

Satyawati College (DU), New Delhi

Kashish Arora has created this Calculator and 50+ more calculators!

Verified by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

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Market Risk Premium Formula

LaTeX Go

Market Risk Premium = Expected Equity Market Rate-Risk Free Rate
MRP = EEMR-R_f

What Is Market Risk Premium?

The market risk premium (MRP) is the difference between the expected return on a market portfolio and the risk-free rate.
The market risk premium is equal to the slope of the security market line (SML), a graphical representation of the capital asset pricing model (CAPM). CAPM measures the required rate of return on equity investments, and it is an important element of modern portfolio theory (MPT) and discounted cash flows (DCF) valuation.

How to Calculate Market Risk Premium?

Market Risk Premium calculator uses Market Risk Premium = Expected Equity Market Rate-Risk Free Rate to calculate the Market Risk Premium, Market Risk Premium describes the relationship between returns from an asset portfolio and treasury bond yields. Market Risk Premium is denoted by MRP symbol.

How to calculate Market Risk Premium using this online calculator? To use this online calculator for Market Risk Premium, enter Expected Equity Market Rate (EEMR) & Risk Free Rate (R_f) and hit the calculate button. Here is how the Market Risk Premium calculation can be explained with given input values -> 17.2 = 19-0.3.

FAQ

What is Market Risk Premium?

Market Risk Premium describes the relationship between returns from an asset portfolio and treasury bond yields and is represented as MRP = EEMR-R_f or Market Risk Premium = Expected Equity Market Rate-Risk Free Rate. Expected Equity Market Rate refers to the anticipated rate of return that investors expect to earn from investing in equities or stocks within a specific market & The Risk Free Rate is the theoretical rate of return of an investment with zero risks.

How to calculate Market Risk Premium?

Market Risk Premium describes the relationship between returns from an asset portfolio and treasury bond yields is calculated using Market Risk Premium = Expected Equity Market Rate-Risk Free Rate. To calculate Market Risk Premium, you need Expected Equity Market Rate (EEMR) & Risk Free Rate (R_f). With our tool, you need to enter the respective value for Expected Equity Market Rate & Risk Free Rate and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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