The government Treasury bond yield is 3% and the risk premium of Tri-Star Machinery is 5%. Tri-Star Machinery's common stock's required rate of return is closest to:

Question

Quizplus · Accepted Answer

The required rate of return for Tri-Star Machinery's common stock can be calculated by adding the government Treasury bond yield (3%) to the risk premium of Tri-Star Machinery (5%). Therefore, the required rate of return is 3% + 5% = 8%.

The Government Treasury Bond Yield Is 3% and the Risk