Over a certain period, large-company stocks had an average return of 12

Finance Dec 27, 2020

Over a certain period, large-company stocks had an average return of 12.19 percent, the average risk-free rate was 2.50 percent, and small-company stocks averaged 17.13 percent. What was the risk premium on small-company stocks for this period

Expert Solution

risk premium = return of small company stocks - risk free rate

risk premium = 17.13% - 2.5%

risk premium = 14.63%

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