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The Equity Risk Premium is the difference between the required rate of return on common stock and the return on a risk-free government bond. The extra return on stocks is the premium one receives in exchange for owning a riskier, more volatile instrument. Though simple in theory, it is complex in practice. Understanding the Equity Risk Premium and being able to implement that understanding are of the utmost importance when making capital decisions. This work presents an overview of the fundamentals of this principle.