1. The U.S. Risk Premium Campbell R. Harvey, Ph.D., Professor,
Duke University

2. U.S. Risk Premium Survey Background
Graham/Harvey: Survey CFOs every quarter
Q through Q (ten quarters)
Current survey attracts about 400 respondents
Why CFOs?
We know from previous surveys and interviews that the CFOs use the risk premium for their capital budgeting
Hence, they have thought hard about risk premium
Should not be biased the way that analyst forecasts might be

3. U.S. Risk Premium One-Year Premium
One-year risk premium quite variable. Currently, about 3%

4. U.S. Risk Premium Ten-Year Premium
Ten-year risk premium is stable. Currently, about 4%

5. U.S. Risk Premium Asymmetry
CFOs believe the downside is much more likely than the upside

6. U.S. Risk Premium Confidence Intervals: September 16, 2002