Homework Answers
Solution:-
Annual Rate of Change in the Price of Gas-
Annual Rate of change in Price of Gas is 4.0125%
Annual Rate of Change in the Price of Hotel-
Annual Rate of change in Price of Hotel is 5.005%
Risk Premium Represents an extra return over and above risk free return. It is a form of compensation for investor who can bear extra risk which are compared to risk free assets.
Investors expects to completely compensated for amount of risk that they undertake in form of risk premium. Some Investors prefer riskier investment that they think these riskier investment has higher and bigger payoff.
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