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The Risk Premium for an Individual Security Is Computed By

Question 12

Multiple Choice

The risk premium for an individual security is computed by:


A) multiplying the security's beta by the market risk premium.
B) multiplying the security's beta by the risk-free rate of return.
C) adding the risk-free rate to the security's expected return.
D) dividing the market risk premium by the quantity (1 - beta) .
E) dividing the market risk premium by the beta of the security.

Correct Answer:

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