Consider the Case of a Simple One-Period Framework $\gamma$ = 085 What Is the Required Risk Premium (Round to Two

Multiple Choice

Consider the case of a simple one-period framework. If i = 12.50 per cent, k = 14.85 per cent, p = 0.98, and $\gamma$ = 0.85 what is the required risk premium (round to two decimals) ?

A) 0.34 per cent
B) 0.35 per cent
C) 0.98 per cent
D) 2.35 per cent