1. Illustrate risk premium for a risk-loving utility function. (Note: the risk premium should be positive.
2. The expected return on JK stock is 13.64 percent while the expected return on the market is 11.0 percent. The beta of JK stock is 1.4. What is the risk-free rate of return? 4.40 percent 3.00 percent 3.30 percent 3.90 percent 4.80 percent
3. The risk-free rate of return is 3 percent and the market risk premium is 10 percent. What is the expected rate of return on a stock with a beta of 1.40? 18.20 14.00 7.20 10.20.