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Risk Premiums

You own $15,925 of Denny’s Corp stock that has an assumed beta of 3.36. You also own $35,672 of Qwest Communications (assumed beta = 1.55) and $12,103 of Southwest Airlines (assumed beta = 1.07). Assume that the market return will be 8.0 percent and the risk-free rate is 2.0 percent.

What is the market risk premium?

Market risk premium %

What is the risk premium of each stock? (Round your answers to 2 decimal places.)

Denny’s risk premium %

Qwest’s risk premium %

Southwest Airlines risk premium %

What is the risk premium of the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Portfolio risk premium %

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92412378

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