The risk-free rate is 4.35 percent.What is the expected risk premium on this security given the following information?
A)4.09 percent
B)4.54 percent
C)5.25 percent
D)5.87 percent
E)6.15 percent

Name: The risk-free rate is 4.35 percent.What is the expected risk premium on this security given the following information? A)4.09 percent B)4.54 percent C)5.25 percent D)5.87 percent E)6.15 percent
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Question

The risk-free rate is 4.35 percent.What is the expected risk premium on this security given the following information? 
A)4.09 percent 
B)4.54 percent 
C)5.25 percent 
D)5.87 percent 
E)6.15 percent

Quizplus · Accepted Answer

E(R) = (.25 × 17) + (.55 × 13) + (.20 × -9) = 9.6 percentRisk premium = 9.6 - 4.35 = 5.25 percent

The Risk-Free Rate Is 4