The Market Has an Expected Rate of Return of 11

question 79

Multiple Choice

The market has an expected rate of return of 11.2 percent.The long-term government bond is expected to yield 5.8 percent and the U.S.Treasury bill is expected to yield 3.9 percent.The inflation rate is 3.6 percent.What is the market risk premium?

• A)6.0 percent
• B)7.3 percent
• C)7.6 percent
• D)8.5 percent
• E)9.3 percent