Monday, January 11, 2016

Market Risk Premium of ASX200 in Dec 2015: 5.08%

That time again...Market Risk Premium time.


Using the usual methodology. 2.5 years of daily returns of the ASX200. : Average = 3.9% (not great)
Add the dividend yield of 4.52%, leads to a total market return of 8.42% (down 3% in 6 months...ouch!)


Risk Free rate has reduced to 3.34% leading to a Market Risk Premium of 5.08%, which is a reduction of around 2%.


This is the lowest Market Risk Premium since 2012. Not great.

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