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You are working for a Chinese company and have been asked to value a potential investment in Argentina; the analysis will be done in U.S.

You are working for a Chinese company and have been asked to value a potential investment in Argentina; the analysis will be done in U.S. dollars. If the implied equity premium for the U.S. is 4.5%, what is the correct equity risk premium to apply to the valuation? Assume that the equity market volatility relative to the bond market volatility is 1.2 for all non-AAA countries. A. 11.9% B. 10.7% C. 7.0% D. 6.6%

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