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Basic Question 2 of 8

What is the primary consideration when using the historical approach for estimating ERP?

A. Market sentiment
B. Current market conditions
C. Length of the historical period
D. Expected future cash flows

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Craig Baugh

Craig Baugh

Learning Outcome Statements

explain historical and forward-looking approaches to estimating an equity risk premium;

CFA® 2025 Level II Curriculum, Volume 3, Module 18.