Valuers should lower equity risk premium component of discount rate

Business Valuation UpdateVol. 9 No. 11
November 2003
Shannon P. Pratt, CFA, ARM, ABAR, FASA, MCBA, CM&AA
cost of capital, discount rate, cost of equity, ibbotson associates, equity risk premium (ERP)


I am now convinced that the long-term arithmetic average general equity risk premium (currently 7.0%) is too high.