The Risk-Free Rate Is 4 A)585%
B)6

Multiple Choice

The risk-free rate is 4.20%. What is the expected risk premium on this stock given the following information?
$\begin{array}{lrr}\text { State of the Economy } & \text { Probability of } & \text { Rate of Return if } \\& \text { State of Economy } & \text { state occurs }\\\text { Boom } & .28& 23\% \\\text { Normal } & .72 &11 \%\end{array}$

A) 5.85%
B) 6.59%
C) 8.22%
D) 10.16%
E) 11.21%