Question

Jerilu Markets has a beta of 1.09. The risk-free rate of return is 2.75 percent and the market rate of return is 9.80 percent. What is the risk premium on this stock

Answer 1

Answer:

7.68 percent

Explanation:

Calculation to determine the risk premium on this stock

Stock risk premium = 1.09 (0.098 - 0.0275)

Stock risk premium = 1.09(0.0705)

Stock risk premium= 7.68 percent

Therefore the risk premium on this stock is 7.68 percent