The Excess Return You Earn by Moving from a Relatively

question 35

Multiple Choice

The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the:

• A) Geometric average return.
• B) Inflation premium.
• C) Risk premium.
• D) Time premium.
• E) Arithmetic average return.

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Definitions:

Stagnation

A state of inactivity or lack of growth and development, often leading to decreased productivity and innovation.

Slowdown

A reduction in the speed or rate of activities, often referring to economic downturns or decreased productivity.

Enthusiasm

Intense and eager enjoyment, interest, or approval.

Yerkes-Dodson Law

A theory that suggests there is an optimal level of arousal for performance, and that too little or too much arousal can adversely affect task performance.