Given the Following Data: Risk-Free Rate = 4%, Average Risk

question 30

Multiple Choice

Given the following data: risk-free rate = 4%, average risk premium = 7.7%. Calculate the required rate of return:

• A) 5.6%
• B) 7.6%
• C) 11.7%
• D) None of the given answers

---

Definitions:

Par Value

The face value of a bond or a stock, as stated by the issuing company, which may differ from its market value.

Zero-Coupon Bond

A zero-coupon bond is a type of bond that does not pay periodic interest but is issued at a significant discount to its face value and redeemed for its full face value at maturity.

Yield To Maturity

The total return anticipated on a bond if it is held until its maturity date, accounting for interest payments and its current market price.