The market risk premium is 0

Finance Dec 05, 2020

The market risk premium is 0.12. The individual security's A risk premium is 0.09. Calculate the risk of security A. Given an answer of 0.000. The formula is EIRA) - R+DARM-R)

Expert Solution

Calculation of the risk of security A:

Beta/risk of security A x Market risk premium = Security A risk premium

Beta/risk of security A = Security A risk premium / Market risk premium

= 0.09 / 0.12

= 0.750 (Answer)

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