In: Finance
The risk premium for an individual security is computed by:
multiplying the security's beta by the risk-free rate of return.
multiplying the security's beta by the market risk premium.
adding the risk-free rate to the security's expected return.
dividing the market risk premium by the beta of the security.
dividing the market risk premium by the quantity (1 + Beta).
The risk premium for an individual security is computed by:
multiplying the security's beta by the market risk premium
Using CAPM(Capital Asset Pricing Model), risk premium for individual security is beta times market risk premium