(Answered) If the rate of return on the sampp 500 index was 23 for

Finance

If the rate of return on the S&P 500 index was 23% for 2009, and the risk-free rate at the end of 2009 was 1%, calculate the equity risk premium for 2009.

Recalculate the equity risk premium using 1981 data, when the risk free rate was 15% and the S&P 500 index return was MINUS 10%.

What are the implications of different equity risk premia numbers for different time periods? HINT: When you use the CAPM you mus enter an equity risk premium. Therefore how do you do that accurately when data for different years produce different equity risk premia.

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