Given a market risk premium of 6.81% and a risk-free rate of 1.45%, what is the...

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Question

Given a market risk premium of 6.81% and a risk-free rate of 1.45%, what is the reward-to-risk ratio of a stock with a beta o

Answer 1

Answer #1

Expected Return = risk free rate + market risk premium *beta

= 1.45% + 6.81% * 1.16

= 9.3496%

Reward-to-risk ratio =(Expected Return - Risk Free Rate ) / Beta

= (9.3496%-1.45%)/1.16

= 0.0681

Answer = 0.0681

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Answer 2

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