what is the risk premium on a stock with a beta of 1.0?

Finance Basics

The Elvis Alive Corporation, makers of Elvis memorabilia, has a beta of 2.35. The return on the market portfolio is 13%, and the risk-free rate is 7%. According to CAPM, what is the risk premium on a stock with a beta of 1.0?

A) 11.75%
B) 18.75%
C) 6%
D) 13%

 

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