If risk-free investments are currently 6% and our expected return from Stock V was 14%. What...

Question

Question

If risk-free investments are currently 6% and our expected return from Stock V was 14%. What is the risk premium on this investment?

Multiple Choice

A. 8%

B. 10%

C. 6%

D. 2%

E. 4%

Answer 1

Answer #1

Risk premium = expected return on stock – return from risk free asset

Expected return on stock =14%

Return from risk free asset = 6%

Risk premium = 14-6 = 8% Option A

Answer 2

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