Overview

This equity risk premium (ERP) template shows the calculation of the equity risk premium of individual security based on the Capital Asset Pricing Model.

The equity risk premium is the excess return an investor expects to receive for holding an equity security vs holding a risk-free asset. It is an important metric to estimate the expected returns on a security. It follows the general risk-return profile of securities, and riskier equities tend to have a higher required return.

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