The average annual return on an Index from 1986 to 1995 was 21.40 percent. The a

Question

The average annual return on an Index from 1986 to 1995 was 21.40 percent. The average annual T-bill yield during the same period was 7.15 percent. What was the market risk premium during these ten years? (Round your answer to 2 decimal places.) The average annual return on an Index from 1986 to 1995 was 21.40 percent. The average annual T-bill yield during the same period was 7.15 percent. What was the market risk premium during these ten years? (Round your answer to 2 decimal places.) The average annual return on an Index from 1986 to 1995 was 21.40 percent. The average annual T-bill yield during the same period was 7.15 percent. What was the market risk premium during these ten years? (Round your answer to 2 decimal places.)

Explanation / Answer

Market Risk Premium= Market rate of Return- Risk free rate of return

Market Risk Premium= 21.40%-7.15%

Market Risk Premium=14.25%

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