Published Friday, October 7, 2022 at: 7:08 PM EDT
The equity risk premium, a concept in modern financial theory illustrated here, quantifies the premium stocks annually averaged in the 20 years ended September 31, 2022.
Stocks, as measured by the Standard & Poor’s 500, averaged a +9.8% annual return in the last 20 years — more than seven times the +1.2% annual return on the risk-free 90-day U.S Treasury bill in the same 20-year period.
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