To fund the massive stimulus package that combats COVID19, the government borrows money through ten-year government bonds that yields 3% per annum. This represents the

a. WAAC

b. risk-free rate

c. required rate of return

d. expected rate of return

that sets the

a. break-out

b. benchmark

c. default rate

d. break-even

for long-term risky assets in the economy.

The government is also borrowing money in the short term with 1 year treasury notes that yield 1.5% per annum.

You are considering investing in risky shares both in the long term and short term. Given the information provided, for long term shares, an acceptable return would be

a. 2.5%

b. -3.5%

c. 3%

d. 3.5%

while for short term shares, an acceptable return would be

a. 2%

b. 1%

c. -2%

d. 1.5%