The expected return is different than the required return. We explain it for an investment project, for the valuation of a share of Coca-Cola and for the market
Get Started for FREE
Sign up with Facebook Sign up with Twitter
I don't have a Facebook or a Twitter account
![]() ![]() |
|
Expected return and Required return: very different concepts
The expected return is different than the required return. We explain it for an investment project, for the valuation of a share of Coca-Cola and for the market risk premium.
However, many valuators assume that the expected return is equal to the required return. Similarly, Expected Equity Premium (EEP) and Required Equity Premium (REP) are two very different concepts, although many books and financial literature do not distinguishing them.