An overview of StarMine Equity Risk Premium Model
- The Equity Risk Premium (ERP) model from StarMine projects the long-term returns of equity markets and the additional returns over a risk-free rate for 66 global markets through a valuation-based approach.
- StarMine's ERP combines the overall earnings yield with an implied dividend payout ratio and long-term predictions for inflation and GDP growth to calculate the ERP figures.
- This model is essential for StarMine's Weighted Average Cost of Capital (WACC) and is a significant element in various other cost of capital models, asset allocation strategies, pension return projections, and numerous financial sectors.
- The ERP view in Workspace and Eikon showcases all input values and permits users to adjust any of the inputs with their own projections.
KEY FACTS
What you get with StarMine Equity Risk Premium Model
The Equity Risk Premium (ERP) model gauges the expected long-term returns of the stock market and the additional returns over a risk-free rate for 66 international equity markets through a valuation-based approach.
ERP utilizes the total earnings yield, an implied dividend payout ratio, and long-term projections of inflation and GDP growth to calculate the ERP figures.
ERP is a vital factor in the Weighted Average Cost of Capital (WACC) and is crucial for other capital cost models, asset allocation models, pension return predictions, and various financial sectors.
The ERP view in Workspace and Eikon presents the values of all input variables and enables users to adjust any inputs based on their own estimates.
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