Assume the Real Rate of Return in the Economy Is

question 23

Essay

Assume the real rate of return in the economy is 4.25 percent,the expected rate of inflation is 3.5 percent and the risk premium is 6.75 percent.Compute the risk free rate and required rate of return.

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Definitions:

Federal Budget Deficit

The federal budget deficit occurs when the government's expenditures exceed its revenues in a given fiscal year, leading to borrowing or use of reserves.

Sherman Antitrust Act

A United States antitrust law that outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade.

Monopolies

Market structures characterized by a single seller who has exclusive control over the supply of a good or service, often leading to higher prices and reduced competition.

Antitrust Policy

Regulations and laws designed to promote competition and prevent monopolies by restricting business practices that could limit market accessibility.