Market model: R = Alpha + beta x R(Em)
R(Em) is the equitty risk premium or Maket risk priemium or just the Market rate? so confused
Please add some comments
It’s the market risk premium which is the difference between the return on the market portfolio and the risk free rate.
Are you absolutely sure? The Schweser notebooks and the videos both seem to indicate that it’s the absolute returns that’s being used, both on the market risk side and the asset i return side.
it’s JUST the return of the market
Yes, it is return on market portfolio (not ERP).
it is the Return on Market Portfolio M