The Equity Risk Premium —the difference between the rate of return on common stock and the return on government securities—has been widely recognized as the key to forecasting future returns on the stock market. Though relatively simplein theory, understanding and making practical use of the equity risk premium concept has been dauntingly complex—until now. In The Equity Risk Premium , financial advisor, author, and scholar Bradford Cornell makes accessible for the first time an authoritative explanation of the equity risk premium and how it works in the real world. Step-by-step, his lucid, nontechnical presentation leads the reader to a new and more enlightened basis for making asset allocation choices. Cornellbegins his analysis by looking at the equity risk premium in the light of stock market history. He examines the use of historical data in estimating future stock market performance, including the historical relationship between stock...
