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:

Defined Contribution Plans

Defined contribution plans are retirement savings plans where the amount contributed is defined, but the benefit received at retirement depends on the investment's performance.

Noncontributory

A benefits plan where the employer bears the full cost without employee contributions.

Workplace-Related Injury

An injury or illness that occurs as a result of activities, environment, or duties associated with one's job.

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Designations for areas of governance within a larger country, notably used in Canada, where provinces have their own governments and territories are governed more directly by the federal government.