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    Risk premium on the market

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    (1) Suppose an ExxonMobil Corporation bond will pay $4,500 ten years from now. If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond?

    (2) The expected return on KarolCo. stock is 16.5 percent. If the risk-free rate is 5 percent and the beta of KarolCo is 2.3, then what is the risk premium on the market assuming CAPM is true?

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    https://brainmass.com/business/interest-rates/risk-premium-market-467391

    Solution Preview

    (1) Suppose an ExxonMobil Corporation bond will pay $4,500 ten years from now. If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond? 

    Value of bond = Present value of cash ...

    Solution Summary

    Solution discusses the risk premium of the market.

    $2.19

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