Alpha stock has a beta of 1.43.The risk-free rate of return is 3.5 percent and the market rate of return is 11 percent.What is the amount of the risk premium on Alpha stock?
A)5.24%
B)5.50%
C)7.50%
D)8.77%
E)10.73%

Name: Alpha stock has a beta of 1.43.The risk-free rate of return is 3.5 percent and the market rate of return is 11 percent.What is the amount of the risk premium on Alpha stock? A)5.24% B)5.50% C)7.50% D)8.77% E)10.73%
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Question

Quizplus · Accepted Answer

Risk premium = 1.43 × (.11 - .035)= .1073,or 10.73%

Alpha Stock Has a Beta of 1