Examveda
Examveda

Cost of common stock is 16% and bond yield is 9% then bond risk premium would be

A. 7.00%

B. 9.00%

C. 1.78%

D. 25.00%

Answer: Option A

Solution(By Examveda Team)

Bond risk premium = Cost of common stock - Bond Yeild
= 16% - 9% = 7%.

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