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

question 31

Multiple Choice

Assume that the S&P/TSX Composite Index currently has a dividend yield of 2% and that on average,the dividends of S&P/TSX Composite Index firms have increased by about 7% per year.If the risk-free interest rate is 4%,then your estimate for the future market risk premium is:

• A) 4%
• B) 7%
• C) 8%
• D) 5%

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