Ask Question
7 June, 14:59

The average annual return on the S&P 500 Index from 1996 to 2005 was 20.36 percent. The average annual T-bill yield during the same period was 3.36 percent. What was the market risk premium during these ten years?

+3
Answers (1)
  1. 7 June, 16:37
    0
    17%

    Explanation:

    We know that the Capital Asset Pricing Model (CAPM) formula would be

    Expected rate of return = Risk-free rate of return + Beta * (Market rate of return - Risk-free rate of return)

    where,

    (Market rate of return - Risk-free rate of return) = Market risk premium

    20.36% - 3.36% = Market risk premium

    So, the market risk premium would be 17%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The average annual return on the S&P 500 Index from 1996 to 2005 was 20.36 percent. The average annual T-bill yield during the same period ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers