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A humanist and a Freudian psychoanalyst are arguing about human nature. What underlying assumptions about psychology and human potential are they likely to bring to their discussion? How can they resolve their differences without either-or thinking?
Risk Premium
The extra return demanded by investors for taking on additional risk above the risk-free rate of return.
Asset Return
The income that an asset produces for its investor, measured as a percentage of the asset's purchase price.
Risk-free Rate
A theoretical return on an investment with zero risk, typically represented by treasury bills or government bonds.
Risk Premium
The extra return above the risk-free rate that investors demand to compensate for the additional risk of holding a risky asset.
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