The expected return on the market portfolio is 12%, and the relevant risk-free rate is 4.2%. What is the equity premium?
A)17.8%
B)16.2%
C)7.8%
D)8.6%

Name: The expected return on the market portfolio is 12%, and the relevant risk-free rate is 4.2%. What is the equity premium? A)17.8% B)16.2% C)7.8% D)8.6%
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Question

Quizplus · Accepted Answer

The equity premium is calculated as the expected return on the market portfolio minus the risk-free rate. Therefore, it is 12% - 4.2% = 7.8%.

The Expected Return on the Market Portfolio Is 12%, and the Relevant