"This war risk premium
is a nightmare," said a Singapore-based shipbroker executive.
By deducting the current interest rate of 5.03 percent from the market's required return, we can get the implied risk premium
of 7.4 percent, which has risen significantly from 5.8 percent at the beginning of the year.
The extra war risk premium
for a modern very large crude carrier or VLCC will be much more and the freight rates will be higher to that extent, he said.
In any conventional model of risk, an asset with flat returns commands a risk premium
. I found that OPEC's revenues, insofar as they are driven by macroeconomic fluctuations, were nearly flat.
In three years, Highland expanded its construction division to 25 specialists and expects to write nearly $100 million of builders' risk premium
The definition of the downside risk premium
in this article is thus associated with the two risky bets.
Conversely, a rise in the risk premium
on the dollar appears to have been at the source of the renewed weakness of the dollar in early 2018, reflecting worries that the fiscal reform voted in December 2017, together with the Budget Agreement of February 2018, would deepen the US fiscal and current account deficits, further deteriorating the external position of the country.
Keywords: Interest rates, Risk premium
, Monetary policy, Tapering.
Comparing the equity risk premium
of the US market with the one of the Euro zone shows that the US is well below its long- term average (at 3.5 per cent vs.
In turn, the risk-free asset is proxied by 10- or 30-year US Treasury bonds, and the market portfolio is represented by the S&P500 index, the market risk premium
being measured with average historical returns.
We augment Laubach and Williams' expression for r* to include the term premium, tp, and the risk premium
, rp, from bond markets.