Over a certain period, large-company stocks had an average return of 12.34 percent, the average risk-free rate was 2.53 percent, and small-company stocks averaged 17.25 percent. What was the risk premium on small-company stocks for this period? 14.72% 4.91% 19.78% 11.78% 9.81%
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Step 1: The risk premium on small-company stocks can be calculated by subtracting the risk-free rate from the average return of small-company stocks. Show more…
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