What is the market risk premium built into the expected


1. If the real rate of interest is 1.45% and the nominal rate of interest is 2.55%, determine the exact expected inflation rate.

2. Analysts expect the stock market to earn 16.8 percent over the next five years. Five year U.S. Treasury securities are earning 4.1 percent. Based on these numbers, what is the market risk premium built into the expected stock market yield?

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Financial Management: What is the market risk premium built into the expected
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