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The expected risk premium on a stock should be the market risk multiplied by beta or the sensitivity.

Expected risk premium (Rp) = beta * (Rm - Rf)
Where,
Rm = Return on markets
Rf = Risk free rate of return


Hope this helps!

2006-08-19 03:04:43 · answer #1 · answered by extremenerd 7 · 1 0

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