In the context of the CAPM and assuming investors' past expectations have been fulfilled,the average historical market risk premium is a useful initial estimate of the expected future market risk premium.

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The CAPM assumes that investors make decisions based on expected returns and the risk involved in those returns. In this context, the historical market risk premium can be a useful initial estimate of the expected future market risk premium if investors' past expectations have been fulfilled. However, it should be noted that this estimate may not always be accurate, and other factors, such as changes in the economy, may affect the future market risk premium.

In the Context of the CAPM and Assuming Investors' Past