Question
You have been given this probability distribution for the holding-period return for GM stock: State of the Economy Probability Return Boom 30% 15% Normal 70%
You have been given this probability distribution for the holding-period return for GM stock:
| State of the Economy | Probability | Return |
| Boom | 30% | 15% |
| Normal | 70% | 4% |
What is the risk-premium for GM stock if the Treasury Bill pays 6%?
| A. | 1% | |
| B. | 3% | |
| C. | 1.3% | |
| D. | 9% |
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Financial Markets and Institutions
Authors: Jeff Madura
11th Edition
1133947875, 9781305143005, 1305143000, 978-1133947875
