Risk Premium the Annual Return on the S&P 500 Index

question 39

Multiple Choice

Risk Premium The annual return on the S&P 500 Index was 12.4 percent. The annual T-bill yield during the same period was 5.7 percent. What was the market risk premium during that year?

• A) 5.7%
• B) 6.7%
• C) 12.4%
• D) 18.1%

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Definitions:

Content Validity

The extent to which a test measures all aspects of the concept or constructs it intends to measure, ensuring the test is representative of all facets of the subject.

Construct Validity

The degree to which a test or instrument accurately measures the theoretical construct or variable it is intended to measure.

Predictive Validity

The extent to which a test's scores accurately forecast or correlate with future behavior, performance, or outcomes.

Concurrent Validity

The degree to which the results of a particular test or measurement correlate with those of a previously validated measure taken at the same time.