Rates value risk premia
Value premium refers to the observation that value stocks tend to return better than growth stocks on a risk-adjusted basis. Fama and French defined the value premium as the difference in returns between high book to market stocks and low book to market stocks, also referred to as HML. Market Risk Premium Definition. The Market Risk Premium (MRP) is a measure of the return that equity investors demand over a risk-free rate in order to compensate them for the volatility/risk of an investment which matches the volatility of the entire equity market. Such MRPs vary by country. Market Risk Premium Formula Calculating the default risk premium Basically, to calculate a bond's default risk premium, you need to take its total annual percentage yield (APY), and subtract all of the other interest rate