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S&P 500

Created in 1957 and published by Standard & Poor's, the S&P 500 is constituted by the top 500 US market capitalizations (NYSE or NASDAQ). Due to its free-float weighting and the large number of companies followed, the S&P 500 is an excellent representation of the US 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.

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