You Own a Stock with an Average Historical Risk Premium

question 28

Multiple Choice

You own a stock with an average historical risk premium of 6.8%. The risk-free rate next year is expected to be 4.6%. What rate of return should you expect on your stock for next year?

• A) 4.60%
• B) 11.38%
• C) 11.87%
• D) 11.40%
• E) 2.20%