Answer: 9.27%
Explanation:
The first part of the question puts the One-year Treasury bill rate at 2%.
The market risk premium is return that the market is offering over what the risk free rate is.
It is therefore calculated by subtracting the risk free rate from the Expected market return which is:
= Expected return on market - Risk free rate
= 11.27% - 2%
= 9.27%
