As I understood it, financial economists claim that there is no such thing as an equity risk premium over bonds. At its simplest, any additional return is counterbalanced by the risk. However, during an Institute of Actuaries seminar held on 18 May 2000, a “financial economist actuary” stated that there can be an allowance for an extra return.

 So how much are we talking about? Does it vary over period measured? Finally, does DVR indicate anything radically different from MVR?

 While it depends upon period, the variation is not that large. Nor does DVR show much difference from MVR. A typical figure is 5% pa.

 In using this sort of statistic for forward progressions. however, I suggest that one would wish to retain a margin and use a smaller figure.

MVR_Premium

DVR_Premium