Nystrand Corporation's stock has an expected return of 12.00%, a beta of 1.25, and is in...
Nystrand Corporation's stock has an expected return of 12.00%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%, what is the market risk premium?
Select the correct answer.
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Homework Answers
Solution:-
Expected return = Risk free rate + Beta * Market risk premium
12% = 5% + 1.25 * Market risk premium
Market risk premium = 7% / 1.25 = 5.60%
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