. When you use a historical risk premium as your expected future risk premium, what are the assumptions that you are making about investors and markets? Under what conditions would a historical risk premium give you too high a number (to use as an expected premium)?

. When you use a historical risk premium as your expected future risk premium, what are the assumptions that you are making about investors and markets? Under what conditions would a historical risk premium give you too high a number (to use as an expected premium)?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 10MC

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7. When you use a historical risk premium as your expected future risk premium, what are the assumptions that you are making about investors and markets? Under what conditions would a historical risk premium give you too high a number (to use as an expected premium)?

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