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Problem 10-25 Risk Premiums (LG10-3) You own $15,925 of Dennys Corp stock that has an assumed beta of 3.36. You also own $35,672 of Qwest
Problem 10-25 Risk Premiums (LG10-3)
| You own $15,925 of Dennys Corp stock that has an assumed beta of 3.36. You also own $35,672 of Qwest Communications (assumed beta = 1.55) and $12,103 of Southwest Airlines (assumed beta = 1.07). Assume that the market return will be 8.0 percent and the risk-free rate is 2.0 percent. |
| What is the market risk premium? |
| Market risk premium | % |
| What is the risk premium of each stock? (Round your answers to 2 decimal places.) |
| Dennys risk premium | % |
| Qwests risk premium | % |
| Southwest Airlines risk premium | % |
| What is the risk premium of the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places.) |
| Portfolio risk premium | % |
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