The Market Has an Expected Rate of Return of 10

Multiple Choice

The market has an expected rate of return of 10.2%. The long-term government bond is expected to yield 4.2% and the U.S. Treasury bill is expected to yield 3.8%. The inflation rate is 3.1%. What is the market risk premium?

A) 2.9%
B) 3.3%
C) 6.0%
D) 6.4%
E) 6.9%