Econnect Fin 330 Investm FINANCE pter 12 Question 2 (of 3) 0.00 points Asset W h

Question

Econnect Fin 330 Investm FINANCE pter 12 Question 2 (of 3) 0.00 points Asset W has an expected return of 16 percent and a beta of 1.45. If the risk-free rate is 3.2 percent, what is the market risk premium? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Market risk premium References eBook & Resources CO Learning Objective: 12-03 The security market line enid the capital asset pricing Worksheet Difficulty: Intermediate Section; 12.5 The Security Market Line 8 MacBook Air FI . F6 44 FT F2 000 F4 --" F5 :

Explanation / Answer

Expected Return = Risk Free rate + Market Risk Premium * Beta

16 % = 3.2% + Market Risk Premium * 1.45

or Market Risk Premium = (16% - 3.2% ) / 1.45

= 8.83

Hence the correct answer is 8.83

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