Since it is still pandemic, the Luxury Hotel is planning to invest in a blue-chip stock at 100 per share with an annual dividend of 8%. The stock has a beta of 1.5. Assume the risk-free rate is 3% and the company expects the market to rise in value by 8%. What is the expected risk premium? O 10.50% O 9.5% O 8.5% O 7.5%

Since it is still pandemic, the Luxury Hotel is planning to invest in a blue-chip stock at 100 per share with an annual dividend of 8%. The stock has a beta of 1.5. Assume the risk-free rate is 3% and the company expects the market to rise in value by 8%. What is the expected risk premium? O 10.50% O 9.5% O 8.5% O 7.5%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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