In his blog post on how the crisis in Ukraine is playing out in the markets, Professor Aswath Damodaran (New York University Stern School of Business) updated his implied equity risk premium to 4.73% as of March 16, up from 4.24% at the start of 2022. To that he adds the risk-free rate (2.19%, the 10-year T-bond rate on March 16) to get the long-term annual expected return on equity of 6.92%, which is “still lower than historical norms, but closer to the numbers that we have seen in the last decade,” he writes. He noted that “equities were already under pressure in the weeks before the invasion, as inflation fears surfaced again, and then hostilities have put further pressure on them.” Damodaran’s implied ERP is a forward-looking method, calculated by backing it out from the current market prices and expected future cash flows, which gives an internal rate of return for equities that is analogous to the yield to maturity on a bond.