Time for another update of the ASX Market Risk Premium. I would assume there has been some improvement here as the ASX has increased in value.
So using our 2.5 years of daily returns of the ASX200, I calculate a capital gain p.a of 2.68%. Combined with the average dividend yield over this period of 4.64%, that gives us a market return of 7.34% (not too shabby)
Looking at the average 10 year government bond rate over the period as a proxy, we have our risk free rate being 3.82%
Which means that our market risk premium is now 3.52%
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