Terry Corporation
One year ago, Jason purchased 50 shares of Terry Corporation stock at $20 per share. Today, one year later, the stock pays a $2 per share dividend and the price is now $22 per share.
-What is the risk premium?

Question

Quizplus · Accepted Answer

The risk premium is defined as the difference in annual returns between common stocks and Treasury bills. In this scenario, we have information about the common stock in Terry Corporation and can assume that Treasury bills are the risk-free investment option. Therefore, the risk premium is the additional return earned from investing in the common stock of Terry Corporation compared to the risk-free rate offered by Treasury bills.

Terry Corporation One Year Ago, Jason Purchased 50 Shares of Terry Corporation