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Banking Journal 2013
The Equity Premium Puzzle in NepalDOI: 10.3126/bj.v3i1.7509, PP. 28-42 Keywords: risk-aversion,yield on stock market,yield on short term debt,subjective time discount factor,equity premium Abstract: The study concentrates on one of the most famous puzzles in asset pricing, the equity premium puzzle, which was first identified by Mehra and Prescott (1985). The paper examines the existence and extent of the equity premium puzzle in Nepalese market. The equity premium puzzle refers to the fact that common stocks have offered a very high real risk premium over that of risk-free bills, which leads to unexplainable high risk-aversion of the investors.
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