QUESTION 2 15 The market price of a security is 28.00 16 Its expected rate of return (Eri) is 16.00% 17 The risk free rate of return (rf) is 6.00% 18 The Current Market Risk Premium (Erm -rf) is 8.00% 19 The stock is expected to pay a CONSTANT dividend into perpetuity. 20 The correlation coefficient wrt market portfolio doubles. 2 21 Note: When the CORR doubles, the beta, and risk premium will also double. 22 There are 4 questions related to this data. 23 All percentages and dollar amounts should be taken out to 2 places. What is the revised Risk Premium? (current risk premium * 2) a. Revised Risk Premium = 14.00% b. Revised Risk Premium = 16.00% C. Revised Risk Premium = 22.00% O d. Revised Risk Premium = 18.00%