Question
Starcents has an expected return of 25 percent, Jpod has an expected return of 20 percent, and the risk-free rate is 5 percent. You invest
Starcents has an expected return of 25 percent, Jpod has an expected return of 20 percent, and the risk-free rate is 5 percent. You invest half your funds in Starcents and the other half in Jpod. What is the risk premium for your portfolio?
a. 20 percent
b. 17.5 percent
c. 15 percent
d. 12.5 percent
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Step 1 of 5 A Risk premium is the excess of return over risk free rate of return that an investor e...
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Investments Analysis and Management
Authors: Charles P. Jones
12th edition
978-1118475904, 1118475909, 1118363299, 978-1118363294
