Homework Answers
Answer :- Option D). The rate of return on the bonds minus the T-bill rate.
Explanation :- Here is the formula for calculation of the average risk premium on bond (whether government or non- government bond):-
Risk premium on bond = Rate of return on bond - Risk free rate.
(Treasury bill i.e., T-bill rate generally represents to Risk free rate).
Accordingly, The Option D i.e., The rate of return on bonds minus the T-bill rate is correct answer for given question.
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