From which publication is the Equity Risk Premium commonly sourced?

From which publication is the Equity Risk Premium commonly sourced?

• A. Ibbotson's
• B. Damodaran's publications
• C. Bloomberg data
• D. S&P research

Answer: (A)

The key idea here is that the equity risk premium is usually drawn from a long-running, widely cited historical data series. The publication most commonly used for this is the Ibbotson data, which is published in the Stocks, Bonds, Bills, and Inflation (SBBI) dataset. This dataset provides decades of historical returns for U.S. stocks and for risk-free assets, allowing analysts to compute the average excess return of equities over a risk-free benchmark across a long horizon. Because of its long history, broad coverage, and heavy citation in textbooks and practitioner work, Ibbotson’s SBBI data have become the standard reference for the equity risk premium. Damodaran does publish ERP estimates and is a useful alternative benchmark, especially for updated or scenario-specific analyses, but the traditional, most widely cited source remains Ibbotson’s publication. Bloomberg data and S&P research aren’t typically the canonical sources used to define the standard ERP in valuation frameworks.

The key idea here is that the equity risk premium is usually drawn from a long-running, widely cited historical data series. The publication most commonly used for this is the Ibbotson data, which is published in the Stocks, Bonds, Bills, and Inflation (SBBI) dataset. This dataset provides decades of historical returns for U.S. stocks and for risk-free assets, allowing analysts to compute the average excess return of equities over a risk-free benchmark across a long horizon. Because of its long history, broad coverage, and heavy citation in textbooks and practitioner work, Ibbotson’s SBBI data have become the standard reference for the equity risk premium.

Damodaran does publish ERP estimates and is a useful alternative benchmark, especially for updated or scenario-specific analyses, but the traditional, most widely cited source remains Ibbotson’s publication. Bloomberg data and S&P research aren’t typically the canonical sources used to define the standard ERP in valuation frameworks.