The Risk Premium for Common Stocks

question 55

Multiple Choice

The risk premium for common stocks

• A)cannot be zero, for investors would be unwilling to invest in common stocks.
• B)must always be positive, in theory.
• C)is negative, as common stocks are risky.
• D)cannot be zero, for investors would be unwilling to invest in common stocks and must always be positive, in theory.

---

Definitions:

Judicial Review

A process by which courts evaluate the constitutionality of legislative acts or government actions.

Marbury V. Madison

A landmark Supreme Court case in 1803 that established the principle of judicial review in the United States, asserting the court's authority to check the compatibility of laws with the Constitution.

Article III

The section of the United States Constitution that establishes the judicial branch, including the Supreme Court and lower courts.

Judicial Review Origins

Refers to the historical development and legal acknowledgment that courts have the power to review and nullify actions or laws that are deemed unconstitutional.