Last Year, ABC Stock Returned 12

question 79

Multiple Choice

Last year, ABC stock returned 12.6 percent, the risk-free rate was 4.0 percent, and the inflation rate was 2.5 percent. What was the risk premium on ABC stock?

• A)8.20%
• B)8.43%
• C)8.60%
• D)8.88%
• E)8.97%

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Definitions:

Accrued Salaries

Salaries that have been incurred but not yet paid, representing a liability for the employer.

Salaries Expense

An expense recorded to represent wages or salaries paid to employees.

Salaries Payable

The liability account that contains the amounts of any salaries owed to employees, which have not yet been paid.

Supplies Account

An account used to track the costs of small items or materials that are used in the operations of a business.