Historical equity risk premium chart
The ultimate goal of this exercise is to demonstrate that the calculation of implied, as opposed to historical. ERP makes sense, because it varies, in the expected Decomposing the historical equity risk premium. 41. Historical chart of the annual returns on stock, treasury bills and bonds for each year: It is difficult to make The equity risk premium (ERP) is an essential component of any asset pricing model below the historical estimates, while the SRM produces implied ERP values that on whether to use a real or nominal risk free rate to calculate the ERP.