What Is the Amount of the Excess Return on a Risk

question 20

Multiple Choice

What is the amount of the excess return on a risk - free security if the risk - free rate is 4% and the market rate of return is 11%?

• A) 0%
• B) 2%
• C) 4%
• D) 7%
• E) 11%

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Definitions:

Proprietorship

A business owned and operated by a single individual, where there is no legal distinction between the owner and the business entity.

Owner's Equity Statement

A financial document that details changes in the equity of a business's owner(s) over a period of time.

Income Statement

A financial document that shows a company's revenues and expenses over a specific period, culminating in the net income.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a particular date, reporting assets, liabilities, and equity.