The market has an expected rate of return of 11.2 percent. The long-term government bond is...
The market has an expected rate of return of 11.2 percent. The long-term government bond is expected to yield 5.8 percent and the U.S. Treasury bill is expected to yield 3.9 percent. The inflation rate is 3.6 percent. What is the market risk premium?
Homework Answers
Market risk premium = Expected return on market-U.S treasury bill yield
= 11.20%-3.90%
= 7.30%
Hence, market risk premium is 7.30%.
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The market has an expected rate of return of 11.2 percent. The
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