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Sagot :
The correct option is 5.55%. The difference between the anticipated return on a market portfolio and the risk-free rate is known as the market risk premium (MRP). The slope of the security market line (SML).
A graphical representation of the capital asset pricing model, is equal to the market risk premium (CAPM). Expected rate of return minus the risk-free rate of return is the market risk premium. Although it is straightforward, there are several elements we need talk about. Expected Return - Risk-Free Rate is the formula for the market risk premium. In the United States, the average market risk premium climbed slightly to 5.6 percent in 2022. This shows that in exchange for the risk they are exposed to, investors seek a little lower return on their investments in that nation.
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