You Own $10,000 of Denny's Corp

Multiple Choice

You own $10,000 of Denny's Corp. stock that has a beta of 3.2. You also own $15,000 of Qwest Communications (beta = 1.9) and $15,000 of Southwest Airlines (beta = 0.4) . Assume that the market return will be 13 percent and the risk-free rate is 5.5 percent. What is the risk premium of the portfolio?

A) 10.51 percent
B) 11.49 percent
C) 12.45 percent
D) 13.62 percent