What required return if country risk premium part of market

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Problem 1: The risk free rate is 5% applicable for a Philippine USD denominated bond with an expected yield of 5%. While it is the given value, it is expected that the market will provide a return of 15%. A similar Australian Bond is expected to yield 2.50%, where the standard deviation for debt and equity are 0.50 and 0.50, respectively. The applicable beta is 1.2. The required return, if the country risk premium is part of the market premium is

a. 17%
b. 19.50%
c. 20%
d. 20.13%

Reference no: EM132814833

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