Assume the following data: Risk-free rate = 4.0 percent; average risk premium = 7.7 percent. Calculate the required rate of return for the risky asset.
A)5.6 percent
B)7.6 percent
C)11.7 percent
D)30.8 percent

Question

Quizplus · Accepted Answer

The required rate of return for the risky asset can be calculated using the formula:
Required rate of return = Risk-free rate + Average risk premium
= 4.0% + 7.7%
= 11.7%
Therefore, the best choice is C.

Assume the Following Data: Risk-Free Rate = 4