Sentences with phrase «low equity risk premium»

In fact, only a permanently low equity risk premium can justify the high stock prices we now enjoy.

That translates into a low equity risk premium.

Chapter 15 — Implications for Companies advises companies on adjusting their decision - making to an era of international projects and a lower equity risk premium.

Not exact matches

The minutes of the Fed's June meeting noted that «some participants suggested that increased risk tolerance among investors might be contributing to elevated asset prices more broadly; a few participants expressed concern that subdued market volatility, coupled with a low equity premium, could lead to a build - up of risks to financial stability.»

«This is typical of a late cycle expansion which is another reason why multiples will be lower as higher volatility typically demands a higher equity risk premium.

Put simply, even taking account of current interest rate levels, and even assuming that stocks should be priced to deliver commensurately lower long - term returns, we currently estimate that the S&P 500 is about 2.8 times the level at which equities would provide an appropriate risk premium relative to bonds.

What we're seeing here — make no mistake about it — is not a rational, justified, quantifiable response to lower interest rates, but rather a historic compression of risk premiums across every risky asset class, particularly equities, leveraged loans, and junk bonds.

We don't believe a low growth world will be less susceptible to recession or credit strains, so we also don't believe that equity risk premiums should be razor thin.

Many believe this dynamic can go on, since rates are probably going to remain low, creating a still high «equity risk premium» — the likely return from stocks over bonds.

Investors demand a premium on their equity investment return relative to lower risk alternatives because their capital is more jeopardized, which leads to the equity risk premium.

Why should we expect a larger equity risk premium from low - risk portfolios than from high - risk portfolios, especially if we're now paying a large premium for the former?

That said, the risk premium factor shows that the largest gains tend to come in the southwest quadrant: low equity valuations and high Baa bond yields, which is a perfect set - up for mean reversion.

Selling stocks when expected equity returns is lower the risk free return is also logical, because there is no risk premium or in fact a negative risk premium.

Under the PROFIT Strategy, net premiums are invested in the Equity Fund and the returns in the fund act as a trigger whereby the profits are booked into a low risk debt fund to protect them against market volatility

The study shows that Indians are risk averse in general and they prefer low to medium risk investments such as bank FD, real estate, gold etc. over equity or equity - linked products.It was found that the most common frequency of premium payment is annual with an average premium sum of Rs. 13000 and that 72 % people buy the insurance products from their banks.