If the Rate of Return on the Stock Market Is

question 114

Multiple Choice

If the rate of return on the stock market is r_m and the rate of return on a risk-free asset is r_f, then:

• A) r_m - r_f measures the risk, all of it nondiversifiable, one has to accept in the stock market.
• B) r_m - r_f measures the risk, all of it diversifiable, one has to accept in the stock market.
• C) r_m + r_f measures the risk, all of it nondiversifiable, one has to accept in the stock market.
• D) r_m + r_f measures the risk, all of it diversifiable, one has to accept in the stock market.
• E) r_m + r_f measures the stock market's total risk.

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Definitions:

Product Samples

Free or low-cost portions of a product distributed to consumers to try before making a purchase decision, serving as a promotional tool.

Premiums

Items offered for free or at a reduced price as an incentive to purchase a product or to reward loyal customers.

Sales Promotion Expenditures

The financial investment allocated towards marketing strategies and campaigns designed to increase immediate consumer demand and stimulate sales of a product or service.

Consumer-Oriented Sales Promotions

Marketing strategies aimed at inducing consumers directly to purchase products through methods such as coupons, discounts, and contests.