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Which one of these will produce an acceptable estimate of the value of the market risk premium? A. Historical rate of return on a market
Which one of these will produce an acceptable estimate of the value of the market risk premium?
A. | Historical rate of return on a market index |
B. | Average rate of return on the S&P 500 plus the risk-free rate |
C. | Dividend yield of the S&P 500 + Consensus forecast of future dividend growth - U.S. Treasury bill rate |
D. | Total dividends paid by the S&P 500 firms for a 1-year period divided by the U.S. Treasury bill rate |
E. | Rate computed using the CAPM and a beta of 1 |
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