If government bonds pay

7.0%

interest and insured savings accounts pay

5.0%

interest, stockholders in a moderately rishr. firm would evpect return-on-equity values of\

5.0%

\

7.0%

\

9.0%

\ above

7.0%

.

If government bonds pay 7.0% interest and insured savings accounts pay 5.0% interest, stockholders in a moderately risky firm would expectreturn-on-equity values of 5.0% 7.0% 9.0% above 7.0%