问题如下：
An equity index is established in 2001 for a country that has relatively recently established a market economy. The index vendor constructed returns forthe five years prior to 2001 based on the initial group of companies constituting the index in 2001. Over 2004 to 2006 a series of military confrontationsconcerning a disputed border disrupted the economy and financial markets. The dispute is conclusively arbitrated at the end of 2006. In total, ten years ofequity market return history is available as of the beginning of 2007. The geometric mean return relative to 10-year government bond returns over 10years is 2 percent per year. The forward dividend yield on the index is 1 percent. Stock returns over 2004 to 2006 reflect the setbacks but economistspredict the country will be on a path of a 4 percent real GDP growth rate by 2009. Earnings in the public corporate sector are expected to grow at a 5percent per year real growth rate. Consistent with that, the market P/E ratio is expected to grow at 1 percent per year. Although inflation is currently highat 6 percent per year, the long-term forecast is for an inflation rate of 4 percent per year. Although the yield curve has usually been upward sloping,currently the government yield curve is inverted; at the short-end, yields are 9 percent and at 10-year maturities, yields are 7 percent.
5. Common stock issues in the above market with average systematic risk are most likely to have required rates of return:
选项：
A.between 2 percent and 7 percent.
B.between 7 and 9 percent.
C.9 percent or greater.
解释：
C is correct.
Based on a long-term government bond yield of 7 percent, a beta of 1, and any of the risk premium estimates that can be calculatedfrom the givens (e.g., a 2 percent historical risk premium estimate or 4.3 percent supply side equity risk premium estimate), the required rate ofreturn would be at least 9 percent. Based on using a short-term rate of 9 percent, C is the correct choice.
老师，请问为什么beta=1？ 谢谢
