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Which one of these will produce an acceptable estimate of the value of the market risk premium?

A. Historical rate of return on a market index

B. Average rate of return on the S&P 500 plus the risk-free rate

C. Dividend yield of the S&P 500 + Consensus forecast of future dividend growth - U.S. Treasury bill rate

D. Total dividends paid by the S&P 500 firms for a 1-year period divided by the U.S. Treasury bill rate

E. Rate computed using the CAPM and a beta of 1

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92427625

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