A reasonable estimate of the market risk premium based on historical data and expert opinion is between 5% and 7%.

Question

Quizplus · Accepted Answer

This statement is true as a market risk premium of between 5% and 7% is generally considered a reasonable estimate based on historical data and expert opinion. The market risk premium represents the excess return investors expect to receive for taking on the risk of investing in stocks compared to a risk-free asset such as a government bond.

A Reasonable Estimate of the Market Risk Premium Based on Historical