Company Risk Premium A company has a beta of 4.5.If the market return is expected to be 14 percent and the risk-free rate is 7 percent,what is the company's risk premium?
A)7.0 percent
B)25.5 percent
C)31.5 percent
D)38.5 percent

Question

Quizplus · Accepted Answer

The company's risk premium is calculated using the formula: Risk Premium = Beta * (Market Return - Risk-Free Rate). Here, it is 4.5 * (14% - 7%) = 31.5%.

Company Risk Premium a Company Has a Beta of 4