CFA Practice Question
Which of the following is incorrect?
A. The 3 factors that impact an investor's required rate of return are: the economy's real risk-free return; expected inflation; risk premium
B. The difference in growth rates of real GDP will lead to a substantial difference in the real risk-free return across countries.
C. Most empirical studies agree that the Equity Risk Premium over the last century has varied in the range of 4.5% to 5.25%.
Explanation: There is considerable disagreement about the magnitude of the Equity Risk Premium, with estimates varying from 2.5% to 6%.
User Contributed Comments 2
| User | Comment |
|---|---|
| deleeuw | what about liquidity premium? |
| agogoi | The risk premium includes default, liquidity and maturity premiums |