If future return on common stock is 14% and rate on T-bonds is 5% then current market risk premium will be

19.00%
9.00%
Rs 9
Rs 19

The correct answer is B. 9.00%.

The market risk premium is the additional return that investors expect to earn on a risky asset over the risk-free rate of return. It is calculated as the difference between the expected return on a risky asset and the risk-free rate of return.

In this case, the expected return on common stock is 14% and the risk-free rate of return is 5%. Therefore, the market risk premium is 14% – 5% = 9%.

Option A is incorrect because it is the total return on common stock, not the market risk premium.

Option C is incorrect because it is the risk-free rate of return, not the market risk premium.

Option D is incorrect because it is the market risk premium expressed in rupees, not in percentage terms.

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