The Market Has an Expected Rate of Return of 12

question 1

Multiple Choice

The market has an expected rate of return of 12.6 percent. The long-term government bond is expected to yield 4.8 percent and the U.S. Treasury bill is expected to yield 2.7 percent. The inflation rate is 3.2 percent. What is the market risk premium?

• A) 9.4 percent
• B) 9.9 percent
• C) 7.8 percent
• D) 8.5 percent
• E) 9.3 percent

---

Definitions:

Confidence Coefficient

The probability that a confidence interval will contain the true parameter value.

Population Proportion

The portion of members in a population that exhibit a specific characteristic, typically expressed as a fraction or percentage.

Population Variance

A measure of the dispersion of a set of data points in a population, indicating how much the members of the population differ from the mean value.

Confidence Interval

A range of values, derived from sample data, that is likely to contain the value of an unknown population parameter, expressed with a certain level of confidence.