Ok, here goes a question from someone who has no formal education in finance/accounting.
Anyway, what do you guys USUALLY use for expected return in the basic materials sector and (metals, iron, chemicals etc.), technology services and software industries? Actually, any expected return for any industry/sector will be fine, but specify. Please don't respond .1.
2007-02-14 12:10:02 · 1 answers · asked by bowl_of_chow_mein_noodles 1 in Business & Finance ➔ Other - Business & Finance
Er... i just need some numbers
2007-02-14 12:30:47 · update #1
Just expected return on some sectors
2007-02-14 12:31:20 · update #2
Equity market risk premium is the additional rate of return an investor in stocks expects for taking risk over and above the risk free rate of return. U.S. Govt bonds are considered risk free with current return of about 4.5%. In order for an investor to take more risk than this a return in excess of 4.5% is required.
Basic materials, technology services and software all have different equity risk premiums.
For a small company there is also a small company risk premium that is expected in addition to the equity risk premium.
Total risk premium for a new company should be somewhere between 18-28% given the factors mentioned here.
Hope this helps,
Dana B
www.thebarfieldgroup.com
2007-02-14 12:24:15 · answer #1 · answered by planningresult 4 · 0⤊ 0⤋