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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 happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
explain historical and forward-looking approaches to estimating an equity risk premium;
CFA® 2025 Level II Curriculum, Volume 3, Module 18.