单选题
Jeffery Marian, an analyst with Arlington Machinery, is estimating a
country risk premium to include in his estimate of the cost of equity for a
project Arlington is starting in India. Marian has compiled the following
information for his analysis:
Indian 10-year government bond
yield=7.20%.
10-year U. S. Treasury bond yield
=4.60%.
Annualized standard deviation of the Bombay Sen stock
index =40%.
Annualized standard deviation of Indian dollar
denominated 10-year government bond=24%.
Annualized standard
deviation of the S&P 500 Index = 18%.
The estimated country
risk premium for India based on Marian's research is closest to:
- A. 5.8%.
- B. 2.6%.
- C. 4.3%.