Consider the Following Two Investment Alternatives

question 20

Multiple Choice

Consider the following two investment alternatives.First,a risky portfolio that pays a 15 percent rate of return with a probability of 60% or a 5 percent return with a probability of 40%,and second,a T-bill that pays 6 percent.The risk premium on the risky investment is

• A) 11 percent.
• B) 1 percent.
• C) 9 percent.
• D) 5 percent.
• E) none of these.

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