The Market Has an Expected Rate of Return of 12

question 30

Multiple Choice

The market has an expected rate of return of 12.4%. Long-term government bonds are expected to yield 6.8% and Treasury bills are expected to yield 4.2%. The inflation rate is 3.8%. What is the market risk premium?

• A) 5.6%
• B) 6.4%
• C) 8.2%
• D) 8.6%
• E) 11.0%

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Definitions:

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