The Nifty is currently trading at 16500 which implies a one year forward P/E multiple of 18x. Assume that the Nifty has reached a steady state with a ROE of 30% and terminal growth of 6%. The 10 year Indian Govt bonds are trading at a yield of 6%. Find the implied ERP (Equity Risk Premium) of the Indian market from this data.

The Nifty is currently trading at 16500 which implies a one year forward P/E multiple of 18x. Assume that the Nifty has reached a steady state with a ROE of 30% and terminal growth of 6%. The 10 year Indian Govt bonds are trading at a yield of 6%. Find the implied ERP (Equity Risk Premium) of the Indian market from this data.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 10P

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