Solutions to Chapter 1 - San Francisco State University

Year Stock. market. return T-bill. return Risk. premium Deviation. ... of risky investments will fall until the expected rates of return on those securities rise to the now-higher required rates of return. 13. Based on the historical risk premium of the S&P 500 (7.7 percent) and the current level of the risk-free rate (about 1.8 percent), one ... ................
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