An analyst observes the following historic geometric returns:

Asset Class Geometric Return

Equities 8.0%

Corporate Bonds 6.5%

Treasury Bills 2.5%

Inflation 2.1%

12. The real rate of return for corporate bonds is closest to: A. 4.3%. B. 4.4%. C. 4.5%.

13. The risk premium for equities is closest to: A. 5.4%. B. 5.5%. C. 5.6%.

14. The risk premium for corporate bonds is closest to: A. 3.5%. B. 3.9%. C. 4.0%.