Risk Premiums
You own $14,820 of Opsware, Inc., stock that has an assumed beta of 4.04. You also own $19,760 of Lowe’s Companies (assumed beta = 1.50) and $3,420 of New York Times (assumed beta = 0.81). Assume that the market return will be 14 percent and the risk-free rate is 6 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.)
Opsware’s risk premium %
Lowe’s risk premium %
New York Times 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 %