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Q: What risk classification would pay the lowest premium?
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If the required rate of return is 11 the risk free rate is 7 and the market risk premium is 4 If the market risk premium increased to 6 percent what would happen to the stocks required rate of return?

If the required rate of return is 11 the risk free rate is 7 and the market risk premium is 4 If the market risk premium increased to 6 percent what would happen to the stocks required rate of return?


The market risk premium is measured by?

The market risk premium is measured by the market return less risk-free rate. You can calculate the market risk premium as market risk premium is equal to the expected return of the market minus the risk-free rate.


What is the premium added as a compensation for the risk that an investor will not get paid in full?

maturity risk premium


What is risk premium?

Risk premium is the compensation investors expect to earn in return for taking risks.


Why would the cost of debt increase if the risk-free rate increase?

The rate of return on a security, in this case the debt, is defined by rd = rRF + Liquidity Premium + Maturity Risk Premium + Default Risk Premium Thus increasing the risk free rate (rRf) should increase the cost of debt. Hopefully that answers your question...


Why would the cost of debt increase if the risk free rate increase?

The rate of return on a security, in this case the debt, is defined by rd = rRF + Liquidity Premium + Maturity Risk Premium + Default Risk Premium Thus increasing the risk free rate (rRf) should increase the cost of debt. Hopefully that answers your question...


Tdg Packaging group I II or III indicates?

The packaging group I, II, or III classification determines the level of risk associated with transporting hazardous materials. Group I materials have the highest level of risk, while Group III materials have the lowest risk. This classification is used to help ensure proper handling and transportation of hazardous materials.


What is the current market risk premium?

Banks are currently using 8% market risk premium. Data as of Feb, 2013.


What does it mean when one has market risk premium?

When one has market risk premium he/she is willing to take an financial risk. The risk premium is how much value stocks should return over a risk-free investment. Stocks are considered a higher financial risk (and possible a faster gain) opposed to, for instance, bonds.


When is your risk tolerance lowest?

Your risk tolerance lowest when you are about to lose something valuable to you. Risk tolerance is integral when it comes to investments.


What is the premium that reflects the risk associated with changes in interest rates for l long-term security?

Maturity Risk Premium (MPR)


What are the classification of risk in insurance?

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