Consider the following two investment alternatives.First,a risky portfolio that pays a 15 percent rate of return with a probability of 60% or a 5 percent return with a probability of 40%,and second,a T-bill that pays 6 percent.The risk premium on the risky investment is
A) 11 percent.
B) 1 percent.
C) 9 percent.
D) 5 percent.
E) none of these.

Question

Quizplus · Accepted Answer

The Answer of Consider the following two investment alternatives.First,a risky portfolio that pays a 15 percent rate of return with a probability of 60% or a 5 percent return with a probability of 40%,and second,a T-bill that pays 6 percent.The risk premium on the risky investment is
A) 11 percent.
B) 1 percent.
C) 9 percent.
D) 5 percent.
E) none of these.

Consider the Following Two Investment Alternatives