alternative investments, creating value, economics, Equity Risk Premium, investments, market risk, measurement, private equity
ERP update – delayed response to a blog reader
I reader asked why so many practitioners use high Equity Risk Premiums in their valuations and fairness opinions. In particular, he mentioned a specific assumption set he had seen including: ERP of 6.8% company specific risk premium of 4% He also commented on how haphazard the use of risk premiums can be and referenced a…