Question
You own a portfolio that has 1000 shares of stock A, which is priced at $13.18 per share and has an expected return of 17.07%,
You own a portfolio that has 1000 shares of stock A, which is priced at $13.18 per share and has an expected return of 17.07%, and 3000 shares of stock B, which is priced at $9.45 per share and has an expected return of 7.54%. The risk-free return is 4.28% and inflation is expected to be 3.27%. What is the risk premium for your portfolio?
A: 6.28% (plus or minus 0.02 percentage points)
B: 5.02% (plus or minus 0.02 percentage points)
C: 3.77% (plus or minus 0.02 percentage points)
D: 5.65% (plus or minus 0.02 percentage points)
E: None of the above is within 0.02 percentage points of the answer
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