Question: Question 2 (10 Marks) You are trying to assess whether the ASX 200 is correctly priced today and have collected the following information: Current Average:

Question 2 (10 Marks) You are trying to assess whether the

Question 2 (10 Marks) You are trying to assess whether the ASX 200 is correctly priced today and have collected the following information: Current Average: 1981---2013 Forward PE 20 12 Return on equity 15% 12% Expected nominal growth (in perpetuity) 3% 4% T-Bond rate 3% 5% (a) Given the average values for the ASX 200 from 1981-2013, estimate the implied equity risk premium over that period. (4 marks)

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