Areas covered and Advanced tools

FTSE 100

Created in 1984 and initially published by the Financial Times, the FTSE 100 is constituted by the 100 largest market capitalizations listed on the London Stock Exchange. Due to its free float weighting and the large number of securities followed, the FTSE 100 is a good proxy for the UK equity market.

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Equity Risk Premium

The market risk premium reflects the additional return required by investors in excess of the risk-free rate. The ERP is essential for the calculation of discount rates and derived from the CAPM. It stems from the IRR which equalizes the discounted present value of forecast cash flow and the current share price.
Details on the concepts and methodology, along with some examples and a glossary, are provided in the site's methodology section, particularly methodological notes 1, 2, 3 and 5.

Other areas covered and advanced tools