Assume a 20-Year Period Produced Small-Company Returns of 16

Multiple Choice

Assume a 20-year period produced small-company returns of 16.7 percent with a risk premium of 9.8 percent,inflation of 5.4 percent,and long-term government bond returns of 10.1 percent.What was the risk-free rate of return during this period?

A) 4) 7%
B) 6) 6%
C) 11.3%
D) 6) 9%
E) 4) 4%