Assume That the S&P/TSX Composite Index Currently Has a Dividend

question 100

Multiple Choice

Assume that the S&P/TSX Composite Index currently has a dividend yield of 3% and that on average,the dividends of S&P 500 firms have increased by about 5% per year.If the risk-free interest rate is 4%,then your estimate for the future market risk premium is:

• A) 7%
• B) 8%
• C) 6%
• D) 4%

---

Definitions:

Pampas

Vast, fertile grasslands found in South America, particularly in Argentina, Uruguay, and southern Brazil, used for grazing and agriculture.

Grazing Herbivores

Animals that feed on plants by cropping them close to the ground, often playing a crucial role in maintaining the health of ecosystems.

Grasslands

Ecosystems dominated by grasses and other herbaceous plants, often found in regions with intermediate rainfall.

Deciduous Forest

A type of forest characterized by trees that lose their leaves seasonally, usually in response to cold or dry weather.