Equity risk premium for UK falling

The future equity risk premium for the UK market is set to be lower than the historical average, according to the London Business School. In its Global Investment Returns Yearbook 2002, the school finds that, factoring in current market volatility, the future equity risk premium for UK and world stock markets will be around 3.5% to 4%. This compares with a historical average premium for equity risk in the UK of around 5.8% over the past 100 years and 5.9% for the world market. The equity risk premium is defined as the difference between the return on stocks and bonds. Elroy Dimson...