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Commerce · Q400

Financial Management

Graduate and Post Graduate · Commerce · question 400

Q400

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

A.
19.00%
B.
9.00%
Answer
C.
Rs 9
D.
Rs 19

Answer: Option B

Solution

Answer: Option B
Solution:
Current Market Risk Premium = Future return on common stock - T-Bond
= 14% - 5% = 9%.