Which one of these will produce an acceptable estimate of the value of the market risk premium?
A) Historical rate of return on a market index
B) Average rate of return on the S&P 500 plus the risk-free rate
C) Dividend yield of the S&P 500 + Consensus forecast of future dividend growth - U.S.Treasury bill rate
D) Total dividends paid by the S&P 500 firms for a 1-year period divided by the U.S.Treasury bill rate
E) Rate computed using the CAPM and a beta of 1
Correct Answer:
Verified
Q6: The use of debt is called
A)financial leverage.
B)production
Q7: Which one of these is represented by
Q8: The asset beta is defined as the
Q9: Which one of these statements is true?
A)The
Q10: The beta of a firm is more
Q12: Companies A and B are identical except
Q13: Which one of these statements related to
Q14: The discount rate for a project should
Q15: Which one of these statements related to
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