The average annual return on the S&P 500 Index from 1986 to 1995 was10.75 percent. The average annual T-bill yield during the same period was 3.85 percent. What was the market risk premium during these ten years? (Round your answer to 2 decimal places.) Average market risk premium %
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
The average annual return on the S&P 500 Index from 1986 to 1995 was10.75 percent. The average annual T-bill yield during the same period was 3.85 percent.
What was the market risk premium during these ten years? (Round your answer to 2 decimal places.)
|
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
