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The Market Has an Expected Rate of Return of 10

Question 133

Multiple Choice

The market has an expected rate of return of 10.2%. The long-term government bond is expected to yield 4.2% and the U.S. Treasury bill is expected to yield 3.8%. The inflation rate is 3.1%. What is the market risk premium?


A) 2.9%
B) 3.3%
C) 6.0%
D) 6.4%
E) 6.9%

Correct Answer:

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