You Own $7,000 of Diner's Corp

Multiple Choice

You own $7,000 of Diner's Corp. stock that has a beta of 1.75. You also own $13,000 of Comm Corp. (beta = 1.15) and $20,000 of Airlines Corp. (beta = 0.7) . Assume that the market return will be 12 percent and the risk-free rate is 3.5 percent. What is the total risk premium of the portfolio?

A) 8.76 percent
B) 8.86 percent
C) 10.20 percent
D) 12.36 percent