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Posted by: Homeworkhelp
Price Quoted by Student: $1.5
Posted On: 2011-05-26 10:10:16

A stock has an expected return of 12.25 percent. The beta of the stock is 1.15 and the risk-free rate is 5 percent. What is the market risk premium?

a. 1.30%

b. 6.50%

c. 15.00%

d. 6.30%

e. 7.25%

SOLUTION Cost of equity r = R rf + b (R km) 12.2
Price $1.5
Attachment 1: A stock has an.doc
Solution Posted By: Homeworkhelp    Posted on: 26-05-2011