WHICH ELEMENT OF BROHI’S MODEL IS LEAST LIKELY CORRECT

6. Which element of Brohi’s model is least likely correct?

A. The equity risk premium for actively traded securities.

B. A risk premium similar to the equity risk premium.

C. Expected cash flows from rents with the redevelopment option.

The following information relates to questions 7 – 9.

Jeffery Chan is a fixed-income analyst at InfoCredit, a credit advisory and investment

management firm. During the weekly meeting with the investment committee, Chan feels that

the US Federal Reserve Board (Fed) will not likely raise the federal funds rate (FFR) by 25 bps

for at least six months because of weak economic data. InfoCredit expects the monthly non-farm

payroll report to confirm the weakness in the economy by showing that US created less than