A stock has a beta of 0.8 and an expected return of 12.4%. The risk-free rate is 1.9%. What is the market risk premium? Enter your answer as a decimal with 4 places of precision (i.e. .1045).
Expected rate=risk free rate+Beta*market risk premium
12.4=1.9+0.8*market risk premium
market risk premium=(12.4-1.9)/0.8
=13.125%
=0.1313(Approx).
A stock has a beta of 0.8 and an expected return of 12.4%. The risk-free rate...