One of the Major Advantages of Using Estimates of the Market

question 24

True/False

One of the major advantages of using estimates of the market risk premium,based upon long- term average returns on equities in excess of bond rates,is that it does not require the assumption that the market risk premium remains constant over time.

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Definitions:

Diversified Portfolio

An investment strategy that involves spreading investments across various asset classes to reduce risk.

Turnover Ratio

A measure of a fund or portfolio's holdings that have been replaced in a given year, indicating its trading activity.

Average Daily Assets

The average value of assets held by a fund over a specific period, usually calculated daily.

Stock

Shares of ownership in a corporation, giving shareholders a claim on the company's assets and earnings.