If a portfolio had a return of 18%, the risk-free asset return was 5%, and the standard deviation of the portfolio's excess returns was 34%, the risk premium would be

A) 13%.
B) 18%.
C) 49%.
D) 12%.
E) 29%.

Risk-Free Asset Return

Risk-Free Asset Return denotes the amount of return expected from an investment with no risk of financial loss, typically associated with government bonds.

Standard Deviation

A measure of the amount of variability or spread in a set of data points; in finance, it's often used to quantify the risk associated with a particular investment.

Risk Premium

The additional return expected by an investor for taking on a higher level of risk, compared to a risk-free investment.