Share
Explore BrainMass

Risk Free Rate and Market Premium

If the slope of the security market line is 7% and the expected return on the market portfolio is 11%, the risk free rate is ___ % and the market risk premium is ____%.

Solution Preview

Slope = expected return - standard deviation
expcted return = Rf +beta(Rm-Rf)
expected market return is E(Rm)
risk free rate is Rf

the ...

$2.19