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To: Marcel who wrote (36270)	2/24/1998 4:00:00 PM
From: Marcel	Respond to of 61433

U.S. equity values imply low risk premiums -- Fed Tuesday February 24, 3:27 pm Eastern Time WASHINGTON, Feb 24 (Reuters) - U.S. equity valuations, even taking account of strong earnings expectations, suggest investors are pricing in only a small degree of risk by historical standards, the Federal Reserve Board said on Tuesday. ''Even with this forecast of real earnings growth, the current level of equity valuation suggests that investors are also requiring a lower risk premium on equities than has generally been the case in the past,'' the Fed said in its monetary policy report to Congress. That assumption was supported by the low risk premiums in corporate bond yields last year, said the report, which accompanied Fed Chairman Alan Greenspan's semi-annual Humphrey-Hawkins testimony. U.S. stock prices, which the Fed pointed out have risen more slowly since last summer, appear to reflect a combination of expectations of ''rapid future earnings growth and a historically small risk premium on equities,'' the U.S. central bank said.