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Basic Question 3 of 8
What is a potential limitation of the forward-looking approach in estimating ERP?
A. Relies on historical data
B. Reflects past market conditions
C. Subject to changes in market expectations
D. Ignores investor sentiment
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
explain historical and forward-looking approaches to estimating an equity risk premium;
CFA® 2025 Level II Curriculum, Volume 3, Module 18.