The risk-free rate is 4.20 percent.What is the expected risk premium on this stock given the following information?

A) 5.85 percent
B) 6.59 percent
C) 8.22 percent
D) 10.16 percent
E) 11.21 percent

Name: The risk-free rate is 4.20 percent.What is the expected risk premium on this stock given the following information? A) 5.85 percent B) 6.59 percent C) 8.22 percent D) 10.16 percent E) 11.21 percent
Brand: Quizplus
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Question

The risk-free rate is 4.20 percent.What is the expected risk premium on this stock given the following information?

A) 5.85 percent 
B) 6.59 percent 
C) 8.22 percent 
D) 10.16 percent 
E) 11.21 percent

Quizplus · Accepted Answer

E(R) = (0.28 × 23) + (0.72 × 11) = 14.36
Risk premium = 14.36 - 4.20 = 10.16 percent

The Risk-Free Rate Is 4