The market risk premium:
A) varies over time as both the risk-free rate of return and the market rate of return vary.
B) plus the risk-free rate of return equals the cost of capital for any firm with a beta of zero.
C) is equal to one percent for a risk-free asset.
D) is equal to the risk-free rate of return multiplied by the beta of a firm.
E) is modified by the standard deviation when computing the cost of equity.
ANSWER
A
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