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| Author: | Maddox, F. Pippert, D. Sullivan, R. |
| Title: | An empirical study of ex ante risk premiums for the electric utility industry |
| Journal: | Financial Management
1995 : AUTUMN, VOL. 24:3, p. 89-95 |
| Index terms: | FINANCIAL MANAGEMENT RISK ELECTRICITY |
| Language: | eng |
| Abstract: | This study examines the relationship between interest rates and utility equity risk premiums. The authors found that an inverse relationship exists, with the equity risk premium changing by 37 basis points for each 100 basis pint change in the 30-year Treasury bond yield. The inverse relationship is stable; however, changes in the relative risk of debt and equity securities produce shifts in the level of risk premiums, regardless of the behavior of Treasury bond yields. The equity risk premiums were consistently positive over the study period. |
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