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Difference between market return and risk-free rate

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Suppose CAPM works, and you know that the expected returns on Google and IBM are estimated to be 12.75% and 9.25%, respectively. You have just calculated extremely reliable estimates of the betas of Google and IBM to be 1.45 and 0.87, respectively. Given this data, what is a reasonable estimate of the market risk-premium in percentage (the average/expected difference between the market return and the risk-free rate)? (Allow two decimals in the percentage but do not enter the % sign.

Reference no: EM132648797

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