STEP 0: Pre-Calculation Summary
Formula Used
Market Risk Premium = Expected Equity Market Rate-Risk Free Rate
MRP = EEMR-Rf
This formula uses 3 Variables
Variables Used
Market Risk Premium - Market Risk Premium is the rate of return on a risky investment.
Expected Equity Market Rate - Expected Equity Market Rate refers to the anticipated rate of return that investors expect to earn from investing in equities or stocks within a specific market.
Risk Free Rate - The Risk Free Rate is the theoretical rate of return of an investment with zero risks.
STEP 1: Convert Input(s) to Base Unit
Expected Equity Market Rate: 19 --> No Conversion Required
Risk Free Rate: 0.3 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
MRP = EEMR-Rf --> 19-0.3
Evaluating ... ...
MRP = 18.7
STEP 3: Convert Result to Output's Unit
18.7 --> No Conversion Required
(Calculation completed in 00.004 seconds)
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## Credits

Created by Kashish Arora
Satyawati College (DU), New Delhi
Kashish Arora has created this Calculator and 50+ more calculators!
Verified by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
Vishnu K has verified this Calculator and 200+ more calculators!

## <Risk Management Calculators

Sortino Ratio
​ Go Sortino Ratio = (Expected Portfolio Return-Risk Free Rate)/Standard Deviation of Downside
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​ Go Maximum Drawdown = ((Trough Value-Peak Value)/Peak Value)*100
Modigliani-Modigliani Measure
​ Go Modigliani-Modigliani measure = Return on Adjusted Portfolio-Return on Market Portfolio
Upside/Downside Ratio
​ Go Upside/Downside Ratio = Advancing Issues/Declining Issues

Market Risk Premium = Expected Equity Market Rate-Risk Free Rate
MRP = EEMR-Rf

## What Is Market Risk Premium?

The market risk premium (MRP) is the difference between the expected return on a market portfolio and the risk-free rate.
The market risk premium is equal to the slope of the security market line (SML), a graphical representation of the capital asset pricing model (CAPM). CAPM measures the required rate of return on equity investments, and it is an important element of modern portfolio theory (MPT) and discounted cash flows (DCF) valuation.

## How to Calculate Market Risk Premium?

Market Risk Premium calculator uses Market Risk Premium = Expected Equity Market Rate-Risk Free Rate to calculate the Market Risk Premium, Market Risk Premium describes the relationship between returns from an asset portfolio and treasury bond yields. Market Risk Premium is denoted by MRP symbol.

How to calculate Market Risk Premium using this online calculator? To use this online calculator for Market Risk Premium, enter Expected Equity Market Rate (EEMR) & Risk Free Rate (Rf) and hit the calculate button. Here is how the Market Risk Premium calculation can be explained with given input values -> 17.2 = 19-0.3.