{"id":43132,"date":"2024-04-15T21:25:06","date_gmt":"2024-04-15T21:25:06","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=43132"},"modified":"2024-04-15T21:25:06","modified_gmt":"2024-04-15T21:25:06","slug":"if-future-return-on-common-stock-is-19-and-rate-on-t-bonds-is-11-then-current-market-risk-premium-will-be","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/if-future-return-on-common-stock-is-19-and-rate-on-t-bonds-is-11-then-current-market-risk-premium-will-be\/","title":{"rendered":"If future return on common stock is 19% and rate on T-bonds is 11% then current market risk premium will be"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Rs 30.00&#8243; option2=&#8221;30.00%&#8221; option3=&#8221;8.00%&#8221; option4=&#8221;Rs 8.00&#8243; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is C. 8.00%.<\/p>\n<p>The market risk premium is the additional return that investors expect to earn on risky assets, such as stocks, over the return on safe assets, such as Treasury bonds. It is calculated as the difference between the expected return on stocks and the risk-free rate of return.<\/p>\n<p>In this case, the expected return on stocks is 19% and the risk-free rate of return is 11%. Therefore, the market risk premium is 8%.<\/p>\n<p>Option A is incorrect because it is the expected return on stocks, not the market risk premium.<\/p>\n<p>Option B is incorrect because it is the market risk premium expressed as a percentage, not as a dollar amount.<\/p>\n<p>Option D is incorrect because it is the market risk premium expressed as a dollar amount, not as a percentage.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Rs 30.00&#8243; option2=&#8221;30.00%&#8221; option3=&#8221;8.00%&#8221; option4=&#8221;Rs 8.00&#8243; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-43132","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>If future return on common stock is 19% and rate on T-bonds is 11% then current market risk premium will be<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/if-future-return-on-common-stock-is-19-and-rate-on-t-bonds-is-11-then-current-market-risk-premium-will-be\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"If future return on common stock is 19% and rate on T-bonds is 11% then current market risk premium will be\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Rs 30.00&#8243; 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