Assume That the S&P 500 Currently Has a Dividend Yield

question 37

Multiple Choice

Assume that the S&P 500 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%.

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Definitions:

Objective

An unbiased, unemotional statement or goal based on facts rather than feelings or opinions.

Peak Performer

An individual who consistently operates at their highest level of skill and performance in their respective field or endeavor.

Personal Connections

The relationships or emotional bonds formed between individuals based on shared experiences, interests, or mutual support.

Avoiding Risks

This refers to strategies or actions taken to minimize potential threats or undesired outcomes in various contexts, including personal, financial, and professional areas.