The Market Has an Expected Rate of Return of 9

question 102

Multiple Choice

The market has an expected rate of return of 9.8%. The long-term government bond is expected to yield 4.5% and the U.S. Treasury bill is 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%

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Definitions:

Needs Hierarchy

A theory in psychology, proposed by Abraham Maslow, which posits that people are motivated to fulfill basic needs before moving on to other, more advanced needs.

Oxytocin

A hormone, secreted by the pituitary gland, that stimulates uterine contractions during childbirth, facilitates the ejection of milk during nursing, and seems to promote, in both sexes, attachment and trust in relationships.

Liquid Trust

A concept referring to a spray or product claimed to contain oxytocin, which supposedly increases trust and bonding between people.

Attaining Goal

The process of achieving a specific objective or reaching a desired outcome.