The Market Has an Expected Rate of Return of 9

question 149

Multiple Choice

The market has an expected rate of return of 9.8%. Long-term government bonds are expected to yield 4.5% and Treasury bills are expected to yield 3.4%. The inflation rate is 3.1%. What is the
Market risk premium?

• A) 2.2%
• B) 3.3%
• C) 5.3%
• D) 6.4%
• E) 6.7%

---

Definitions:

Enforceable Security

A financial instrument or an interest in property that can be legally upheld and enforced in a court of law.

Attachment

A legal process by which a court orders the seizure of property to secure the satisfaction of a judgment or as a means of obtaining jurisdiction.

Perfection

The process or method by which a secured party obtains a priority in certain collateral belonging to a debtor against creditors or claimants of a debtor; it usually entails giving notice of the security interest, such as by taking possession or filing a financial statement.

UCC Article 2

Part of the Uniform Commercial Code that governs the sale of goods, providing a framework of rules and regulations for merchants and others engaged in commerce.