* Sells common stock at $123 per share

* Goldman ramps up risk despite "dangerous" environment

* Shares drop 11.6 percent to $115.11

* CFO: TARP repayment depends on reg approval, stress test (Adds Treasury spokesman in paragraph 9)

By Karey Wutkowski and Jonathan Stempel

WASHINGTON/NEW YORK, April 14 (Reuters) - Goldman Sachs Group Inc (GS.N: Quote, Profile, Research) sold $5 billion of stock to help fulfill what it called its "duty" to repay a federal bailout, but the government worries a quick return of funds could pressure other banks to repay their aid prematurely.

The sale of 40.65 million shares at $123 each gives the bank roughly half what it needs to return the $10 billion of taxpayer money it took from the Troubled Asset Relief Program.

"We never believed the investment of taxpayer funds was intended to be permanent," Goldman CFO David Viniar said on a conference call on Tuesday. "We view it as our duty to return the funds, as long as we can do it without negatively impacting our financial profile, or ability to act as a central liquidity provider to the global capital markets."

Viniar said repayment would depend on regulatory approval and the results of a government "stress test" gauging Goldman's ability to weather a deep recession. Nineteen banks are undergoing such tests, which are to be completed this month. [ID:nN14452569]