Risk Premium: If the annual return on the S\&P 500 Index was 18.1 percent. The annual T-bill yield during the same period was 6.2 percent. What was the market risk premium during that year? 6.2% 11.9% 18.1% 24.3% Risk Premiums: You own $20,000 of Diner's Corp stock that has a beta of 2.4 . You also own $10,000 of Comm Corp ( beta =1.5) and $10,000 of Airlines Corp (beta =0.5 ). Assume that the market return will be 12 percent and the risk-free rate is 4 percent. What is the total risk premium of the portfolio? 11.73% (B) 13.6% 17.6% 20.4% Under/Over Valued Stock: A manager believes his firm will earn a 14 percent return next year. His firm has a beta of 0.9 , the expected return on the market is 12 percent, and the risk-free rate is 4 percent. Compute the return the firm should earn given its level of risk and determine whether the manager is saying the firm is under-valued or over-valued. 11.2%, under-valued 11.2%, over-valued 14%, under-valued 14%, over-valued Portfolio Beta: You have a portfolio with a beta of 0.85 . What will be the new portfolio beta if you keep 85 percent of your money in the old portfolio and 15 percent in a stock with a beta of 1.95 ? 1,00 1.015 1,4 28