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Business, 06.08.2021 17:40 jurneii

Consider the following two investment alternatives. First, a risky portfolio that pays a 12 percent rate of return with a probability of 50% or a 4 percent return with a probability of 50%, and second, a T-bill that pays 3 percent. 10. The risk premium on the risky investment is A) 11 percent. B) 1 percent. C) 9 percent. D) 5 percent. E) none of the above.

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