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Suppose that the current return available on a risk-free 10-year U.S. Treasury security is 4.7%. If the risk premium currently attributed to investment-grade commercial real

Suppose that the current return available on a risk-free 10-year U.S. Treasury security is 4.7%. If the risk premium currently attributed to investment-grade commercial real estate investments of comparable maturity in the U.S. is 3.7%, determine the current required rate of return (i.e., IRR) on investment-grade commercial real estate.

Multiple Choice

1.0%

2.3%

3.7%

8.4%

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