Which of the following statements is correct when Treasury bills yield 7.5% and the market risk premium is 9.5%?
A) The S&P 500 would be expected to yield about 8.50%.
B) The S&P 500 would be expected to yield about 9.50%.
C) The S&P 500 would be expected to yield about 12.68%.
D) The S&P 500 would be expected to yield about 17.00%.

Question

Quizplus · Accepted Answer

The expected yield of the S&P 500 is calculated by adding the Treasury bill yield (risk-free rate) to the market risk premium: 7.5% + 9.5% = 17.0%.

Which of the Following Statements Is Correct When Treasury Bills