If a Portfolio Had a Return of 18%, the Risk-Free

question 50

Multiple Choice

If a portfolio had a return of 18%, the risk-free asset return was 5%, and the standard deviation of the portfolio's excess returns was 34%, the risk premium would be

• A)13%.
• B)18%.
• C)49%.
• D)12%.

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Definitions:

Downward Sloping Demand

A fundamental principle in economics that suggests demand for a product decreases as the price increases, illustrated by a demand curve that slopes downwards from left to right.

Homogeneous Product

A Homogeneous Product is one that is seen as identical or very similar in nature, quality, and performance, regardless of the producer.

Excess Capacity

A situation where a company produces less than the maximum amount it can produce due to lower demand.

Equilibrium

A state where supply equals demand in a market, resulting in an optimal distribution of goods and services.