Friday, July 3, 2015

Market Risk Premium in July 2015: 7.83% (ouch)

Well the market correction has finally hit. Big drop in ASX200 returns over the last 2 years (back to 6.96%..a 4% drop since December). Add in the dividend yields of around 4.39% (not much change) and we have a total market return of 11.35% (boo). This is down from 15% 6 months ago.


Risk free rate is pretty steady at 3.52% leaving us with a market risk premium of 7.83%. By my calculations the risk premium hasn't been this low since December 2013 (though it was on the up that time)

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