Asset W has an expected return of 11.0 percent and a beta of 1.20. If the risk-f

Question

Asset W has an expected return of 11.0 percent and a beta of 1.20. If the risk-free rate is 2.1 percent, what is the market risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Asset W has an expected return of 11.0 percent and a beta of 1.20. If the risk-free rate is 2.1 percent, what is the market risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Expected Return = E(R) = 11%

Beta = 1.20

Risk free Rate = Rf = 2.10

E(R) = Rf + Beta X Risk Premium

11 = 2.10+ 1.20 X Risk Premium

Risk Premium = 7.42

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