How much are you willing to pay for annual coupon bond

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Reference no: EM131897069

1. Market Risk Premium

The difference between the rate of return of a specific asset and the rate of return of a less risky asset.

Risk-averse investors dislike risk and require higher rates of return as an inducement to buy riskier assets.

The excess return required from an investment in a well-diversified portfolio over that required from a risk-free investment.

None of the above.

The excess return required from an investment in a risky asset over that required from a risk-free investment.

2. How much are you willing to pay for a 6% annual coupon bond with a 4% yield, which comes due in 12 years?

$1,187.70

$2,502.58

$674.80

None of these

$832.32

Reference no: EM131897069

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