A company has a beta of 1.79. If the market return is expected to be 18.4...
A company has a beta of 1.79. If the market return is expected to be 18.4 percent and the risk-free rate is 6.20 percent, what is the company's risk premium?
Homework Answers
Correct Answer is option C
Risk premium = Rm - Rf
Risk premium = Market risk - Risk free rate
Risk premium = 18.4 -6.4
Risk premium = 12.00%
Risk premium is positive if the investor is risk
averse.
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