According to the CAPM, what is the market risk premium given an expected return on a security of 13.6%, a stock of 12, and a risk free interest rate of 4%. a. 8%
b. 4.8%
c. 6.6%
d. 4%

The question is incomplete. Here is the complete question

According to the CAPM, what is the market risk premium given an expected return on a security of 13.6%, a stock beta of 1.2, and a risk-free interest rate of 4%?

8%

Explanation:

The expected return on security is 13.6%

The stock beta is 1.2

The risk free interest rate is 1.4

Therefore, using the CAMP , the market risk premium can be calculated as follows

13.6%= 4% + 1.2×MRP

13.6%-4%= 1.2MRP

9.6%=1.2MRP

MRP= 9.6/1.2

MRP= 8%

Hence the market risk premium is 8%

the interest will be $59.71

hope this

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