Which One of These Will Produce an Acceptable Estimate of the Value

question 52

Multiple Choice

Which one of these will produce an acceptable estimate of the value of the market risk premium?

• A)Historical rate of return on a market index
• B)Average rate of return on the S&P 500 plus the risk-free rate
• C)Dividend yield of the S&P 500 + Consensus forecast of future dividend growth - U.S.Treasury bill rate
• D)Total dividends paid by the S&P 500 firms for a 1-year period divided by the U.S.Treasury bill rate
• E)Rate computed using the CAPM and a beta of 1

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Definitions:

Proximate Cause

The legal principle that establishes the cause of an event as being sufficiently related to an injury to be held legally liable for that injury.

Negligent Conduct

Behavior that falls below the standard of care expected to protect others against unreasonable risk of harm.

Defendant's Negligence

Defendant's negligence is a legal concept where the defendant failed to act with the level of care that someone of ordinary prudence would have exercised under the same circumstances, leading to harm or damage.

Negligence Per Se

An act that is considered negligent because it violates a statute or regulation.