The Risk Premium for Common Stocks

question 56

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.
• E) cannot be zero, for investors would be unwilling to invest in common stocks and is negative, as common stocks are risky.

---

Definitions:

Profit Center

A business unit or department within an organization that is responsible for generating its own revenue and profit.

Direct Expenses

Costs that can be directly traced to a product, service, or activity without any need for allocation.

Profit Center

A profit center is a division or branch within a company that is responsible for generating its own revenue and profit, allowing for performance measurement independently.

Uncontrollable Costs

Uncontrollable costs are expenses that cannot be directly managed or influenced by actions of the business or its managers, often due to external factors.