Question

Suppose Paycheck, Inc., has a beta of 0.99 If the market return is expected to be 12 70 percent and the risk free rate is 6.30 percent, what is Paychecks risk premium? (Round your answer to 2 decimal places.) Paychecks risk premium References eBook & Resources Worksheet Problem 10-10 Company Risk Premium (L010-3) Diticulty Dificulty Check my.work

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Answer #1

paycheck's risk premium = beta * (market return - risk free rate)

=> 0.99 * (12.7% - 6.30%)

=>6.336%

=>6.34%.

Paycheck's risk premium = 6.34%........(to two decimals).

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