What Is Equity Risk Premium?

Chris at Hauseit® (https://www.hauseit.com) explains what equity risk premium means, and how you can calculate it.

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Equity risk premium is a term that is not fully understood by the majority of investors, which isn't surprising given the zero interest rate policies we've kept since 2008.

Any investment's expected rate of return consists of two parts: the risk-free rate plus the risk premium.

For equities, the total return would thus consist of the risk free rate plus the equity risk premium.

The risk free rate people refer to is the yield on US Treasuries. For example, the 3 Month T-Bill, though we recommend using longer duration Treasuries as a risk-free rate if you are analyzing a long duration asset like real estate or stocks.

We explore this mystery and explain further in the following video.
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Hauseit Group LLC, Licensed Real Estate Broker
Tel: +1 (888) 494-8258
Email: team@hauseit.com
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