can someone explain this question.
given:
geometric mean return relative to 10yr govt bond over 10yrs is 2% per year. forward divd yield on index is 1%. Although yield curve usually upward slopping , currently govt yield curve is inverted , at short end yields are 9% and 10yr maturities yields are 7%
Q. Common stock issues in the above market with average systematic risk are most likely to have required rate of return.
a. 2-7 % b. 7-9% c. 9% or higher (answer is c)