CFOs Project the Equity Risk Premium

How do the corporate experts most responsible for assessing the cost of equity currently feel about future U.S stock market returns? In their March 2018 paper entitled “The Equity Risk Premium in 2018”, John Graham and Campbell Harvey update their continuing study of the views of U.S. Chief Financial Officers (CFOs) and equivalent corporate officers on the prospective U.S. equity risk premium (ERP) relative to the 10-year U.S. Treasury note (T-note) yield, assuming a 10-year investment horizon. Based on 71 quarterly surveys over the period June 2000 through December 2017 (an average 351 responses per survey), they find that: (more…)