Which one of the following is the computation of the risk premium for an individual security? E(R) is the expected return on the security, Rf is the risk-free rate, β is the security's beta, and E(RM) is the expected rate of return on the market.
A) E(RM) -Rf
B) E(R) - E(RM)
C) E(R) - [E(RM) + Rf]
D) β[E(RM) - Rf]
E) β [E(R) - Rf]
Correct Answer:
Verified
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