One of the disadvantages of using historical returns to estimate the market risk premium is that the past may not be a good guide to when economic conditions change quickly
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One of the disadvantages of using historical returns to estimate the market risk premium is that the past may not be a good guide to the future:
ever
when the economic conditions are relatively stable
when economic conditions change quickly
Economics studies scarcity and its effects on the use of resources, the production of goods and services, the growth of output and wealth over time, and many other complex issues important to society.
Results Example: As the corn yield increases, farmers reduce the price of their crops so that they can sell their produce. If the supply is too much than the demand, that is, too much corn is needed to feed the people of the country, the produce is forced to waste and the farmers lose their production costs.
The economy plays a role in our daily lives. The study of economics allows us to understand past, future, and present models and apply them to societies, governments, businesses, and individuals.
Learn more about economics here
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