Walden University The Concept of Market Risk Premium Essay
Question Description
I’m working on a writing case study and need an explanation and answer to help me learn.
Right now, is the market risk premium sufficient for you to invest in the stock market? Why or why not?
Describe the impact of market risk premium (MRP) on price of common stock
- Why do stock prices fall when market risk premium increases?
- What is the relationship between equity risk premium and stock prices?
- To answer that question:
- How much do you think the stock market will return over and above the Treasury10-year bond rate?
As an investor, is that an important question to answer before you invest in the stock market? If so, why?
Do you think it will return enough to justify the added risk?
- Do you think this premium will vary for different countries or for the same country over different time spans?
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