Asset Y has a beta of 1.2. The risk-free rate of return is 6 percent, while the return on the market portfolio of assets is 12 percent. The asset's market risk premium is ________.
A) 7.2 percent
B) 6.0 percent
C) 13.2 percent
D) 10 percent

Question

Quizplus · Accepted Answer

The market risk premium is the difference between the return on the market portfolio of assets and the risk-free rate of return. In this case, it is 12 percent - 6 percent = 6.0 percent.

Asset Y Has a Beta of 1