Risk Premium (Part 1 of 5)

Company X owns $55,000 of Alpha, Inc. stock that has a beta of 4.8. Company X also owns $20,000 of Deltas Company (beta = 2.6) and $25,000 of Sigma (beta = 0.6). Assume that the market return will be 9 percent and the risk-free rate is 3 percent. a) What is the market risk premium? (If the answer is 1.234%, please enter 1.234)

b) What is the risk premium of Alpha, Inc? (If the answer is 1.234%, please enter 1.234)

c) What is the risk premium of Delta's Company? (If the answer is 1.234%, please enter 1.234)

d) What is the risk premium of Sigma? (If the answer is 1.234%, please enter 1.234)

e) What is the portfolio's risk premium? (If the answer is 1.234%, please enter 1.234)