Question
The historical returns data for the past three years for Stock B and the stock market portfolio are: Stock B: 24%, 0%, 24%, Market Portfolios:
The historical returns data for the past three years for Stock B and the stock market portfolio are: Stock B: 24%, 0%, 24%, Market Portfolios: 10%, 12%, 20%. If the risk-free rate is 4%, calculate the market risk premium.
rm = (10% + 12% + 20%)/3 = 8%
Market Risk Premium = 14% - 4% = 10%
I don't understand where 14 comes from. Can you help me with this. Thank you.
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Personal Finance
Authors: McGraw Hill
Student Edition
0078958393, 978-0078958397
