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Confidence interval for the mrp in the us

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Reference no: EM132951482

Suppose that you estimate the Market Risk Premium for the U.S. for the period 1928 to 2011 to be 6.5%. Suppose the annual standard deviation of S&P 500 return were 20% for this period. What is your 95% confidence interval for the MRP in the U.S.

a. 4.3 to 8.7%

b. 6.5% +/- 4.4% - CORRECT

c. The MRP is exactly 6.5%

Reference no: EM132951482

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