Enrollment for the FMVA™ Certification Program is now OPEN!

Market Risk Premium Template

Market Risk Premium Template

This market risk premium template will show you how to compute the market risk premium using the expected rate of return and risk-free rate.

Below is a preview of the market risk premium template:

Market Risk Premium Template Screenshot

 

Download the Free Template

Enter your name and email in the form below and download the free template now!

Market Risk Premium Template

Download the free Excel template now to advance your finance knowledge!

 

The market risk premium is the additional return an investor will receive (or expects to receive) from holding a risky market portfolio instead of risk-free assets.

The market risk premium is part of the Capital Asset Pricing Model (CAPM) which analysts and investors use to calculate the acceptable rate of return.  At the center of the CAPM is the concept of risk (volatility of returns) and reward (rate of returns).  Investors always prefer to have the highest possible rate of return combined with the lowest possible volatility of returns.

 

The formula for Market Risk Premium is:

Market Risk Premium = Expected Rate of Return – Risk-Free Rate

 

Usually, a government bond yield is the instrument used to calculate risk-free assets as it has little to no risk.

 

More Free Templates

For more resources, check out our business templates library to download numerous free Excel modeling, PowerPoint presentation and Word document templates.

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)™ by completing CFI’s online financial modeling classes and training program!