Reference no: EM132751359

Problem 1: You are considering purchasing stock in High Dollar Enterprises or purchasing U.S. Treasury Bills. At a minimum, which of the following would you need to know to estimate the premium for purchasing the stock instead of the risk-free asset?

I. asset's standard deviation
II. asset's beta
III. risk-free rate of return
IV. market risk premium
Multiple Choice

Option 1: I and III only
Option 2: II and IV only
Option 3: III and IV onlyIncorrect
Option 4: I, III, and IV only
Option 5: I, II, III, and IV