You Own $7,000 of Diner's Corp

question 7

Multiple Choice

You own $7,000 of Diner's Corp. stock that has a beta of 1.75. You also own $13,000 of Comm Corp. (beta = 1.15) and $20,000 of Airlines Corp. (beta = 0.7) . Assume that the market return will be 12 percent and the risk-free rate is 3.5 percent. What is the total risk premium of the portfolio?

• A) 8.76 percent
• B) 8.86 percent
• C) 10.20 percent
• D) 12.36 percent

---

Definitions:

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment.

Attachment

A deep and enduring emotional bond that connects one person to another across time and space.

Cognitive Explanations

Theories or interpretations that account for a phenomenon based on mental processes such as perception, memory, and reasoning.

Experimental Tests

Controlled tests carried out to investigate the effectiveness or properties of a theory or substance.