Ask Question
18 September, 00:46

The market has an expected rate of return of 12.6 percent. The long-term government bond is expected to yield 5.8 percent and the U. S. Treasury bill is expected to yield 3.3 percent. The inflation rate is 3.2 percent. What is the market risk premium?

+3
Answers (1)
  1. 18 September, 04:23
    0
    The market risk premium is 9.3%

    Explanation:

    Market risk premium can be obtained by calculating the difference between the expected return on the market and the risk-free rate.

    In the question given, the risk rate fee refers to the US treasury bill.

    Therefore,

    Market risk premium = market rate-risk free rate

    = (12.6% - 3.3%)

    = 9.3%

    So, in the question given, the market risk premium is

    9.3%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The market has an expected rate of return of 12.6 percent. The long-term government bond is expected to yield 5.8 percent and the U. S. ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers