In 2000, the S&P 500 Index Earned 11 Percent While

question 111

Multiple Choice

In 2000, the S&P 500 Index earned 11 percent while the T-bill yield was 4.4 percent. Given this information, which of the following statements is correct with respect to the market risk premium?

• A) The market risk premium must have been negative.
• B) The market risk premium must have been positive.
• C) The market risk premium must have been zero.
• D) Unable to answer without more information.

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