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Assume That the S&P 500 Currently Has a Dividend Yield

Question 37

Multiple Choice

Assume that the S&P 500 currently has a dividend yield of 3% and that on average,the dividends of S&P 500 firms have increased by about 5% per year.If the risk-free interest rate is 4%,then your estimate for the future market risk premium is:


A) 7%.
B) 8%.
C) 6%.
D) 4%.

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