The Market Has an Expected Rate of Return of 10

question 30

Multiple Choice

The market has an expected rate of return of 10.2%. The long-term government bond is expected to yield 4.2% and the U.S. Treasury bill is expected to yield 3.8%. The inflation rate is 3.1%. What is the market risk premium?

• A) 2.9%
• B) 3.3%
• C) 6.0%
• D) 6.4%
• E) 6.9%

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Definitions:

Articulated

Clearly expressed or made plain, often used to describe thoughts or ideas that are communicated effectively.

Interdependency

The mutual dependence between entities or systems, where they rely on each other for functioning or survival.

Orders

Instructions or commands given by someone in authority.