k ces Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk aversion in A= E(TM)-Ty Required: is A = 4: a. What would be a reasonable guess for the expected market risk premium? Market Risk Premium % b. What value of A is consistent with a risk premium of 9% ? (Round your answer to 2 decimal places.) Consistent value of A c. What will happen to the risk premium if investors become more risk tolerant? Increased risk tolerance means decreased risk aversion (A), which results in a(n) in risk premiums.