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You’ve observed the following returns on Balboa, Inc. stock over the past five years: 15 percent,...

You’ve observed the following returns on Balboa, Inc. stock over the past five years: 15 percent, -15 percent, 17 percent, 27 percent, and 10 percent. Suppose the average T-bill rate over the period was 4.1 percent. What was the average risk premium on Balboa, Inc. stock?

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Answer #1

Ans 6.70%

average risk premium on Balboa, Inc. stock = 10.80% - 4.10%

                                                                = 6.70%

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