Question
1b. Using the above formula, calculate the following market risk premiums. (Assume a current risk-free rate of 1.75%.) Year Market Rate of Return Market Risk
1b. Using the above formula, calculate the following market risk premiums. (Assume a current risk-free rate of 1.75%.)
|
Year
|
Market Rate of Return
|
Market Risk Premium
|
|
2013
|
5.00%
|
|
|
2014
|
3.76%
|
|
|
2015
|
9.14%
|
|
1c. Complete the following chart with the missing values.
|
Year
|
Market Rate of Return
|
Risk-free Rate
|
Market Risk Premium
|
|
2016
|
4.68%
|
2.05%
|
|
|
2014
|
|
3.33%
|
3.44%
|
|
2015
|
2.70%
|
|
0.91%
|
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Fundamentals of Investing
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
12th edition
ISBN: 978-0133075403, 133075354, 9780133423938, 133075400, 013342393X, 978-0133075359
