You Own $10,000 of Denny's Corp

question 73

Multiple Choice

You own $10,000 of Denny's Corp. stock that has a beta of 3.2. You also own $15,000 of Qwest Communications (beta = 1.9) and $15,000 of Southwest Airlines (beta = 0.4) . Assume that the market return will be 13 percent and the risk-free rate is 5.5 percent. What is the risk premium of the portfolio?

• A) 10.51 percent
• B) 11.49 percent
• C) 12.45 percent
• D) 13.62 percent

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Definitions:

Transportation Networks

Systems of interconnected pathways that facilitate the movement of people, goods, and services from one location to another.

Raw Materials

Basic materials that are used in the production of goods, finished products, or intermediate materials which are feedstock for future finished products.

Shipping By Sea

The process of transporting goods across bodies of water in ships or vessels, a common method for international trade.

Air Transport

The movement of passengers and cargo by aircraft, a key component of global transportation networks.