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How to estimate the implied equity risk premium

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Reference no: EM132647040

Problem 1: The S&P 500 is at 1,400. The expected dividends and cash flows next year on the stocks in the indexare expected to be 5% of the index. If the expected growth rate in dividends and cash flows over the long term is expected to be 6% and the riskless rate is 5.5%, estimate the implied equity risk premium.

Reference no: EM132647040

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