The asset market risk premium

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Reference no: EM131842672

1. Calculate the required rate of return for Mercury Inc., assuming that the real risk-free rate is equal to 4% and the market risk premium (note that is not the same as the market return) is 6%. Mercury has a beta of 1.5, and its realized rate of return has averaged 15% over the last 5 years.

13%

16%

17%

18%

2. Analysts have calculated asset y to have a beta of 1.2. The risk-free rate of return is 4 percent, while the return on the market portfolio of assets is 10 percent. The asset's market risk premium

11.2 percent.

6.0 percent.

12.8 percent.

7.2 percent.

Reference no: EM131842672

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