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johnpaech johnpaech
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6 years ago
Suppose a risky security pays an average cash flow of $100 in one year.  The risk-free rate is 5%, and the expected return on the market index is 13%.  If the returns on this security are high when the economy is strong and low when the economy is weak, but the returns vary by only half as much as the market index, what risk premium is appropriate for this security?
A) 4%
B) 6.5%
C) 9%
D) 11%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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pbrown223pbrown223
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6 years ago
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johnpaech Author
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#2
5 years ago
Thanks for helping with my corporate finance course
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