The Risk-Free Return (RF) Equals

question 30

Multiple Choice

The risk-free return (RF) equals:

• A) 0.0%.
• B) the rate on the bonds of financially sound corporations.
• C) the average of the last 3 years' inflation rate.
• D) the return on Treasury securities.

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Definitions:

Constant Growth Model

A dividend discount model that assumes dividends will increase at a constant growth rate indefinitely, useful for valuing stocks.

Gordon Model

A dividend discount model that values a stock by considering future dividends that grow at a constant rate, also known as the Gordon Growth Model.

Investor Demand

The interest and willingness of investors to purchase securities and other investment products, influenced by economic conditions, market trends, and the performance of specific investments.

IPO

Initial Public Offering, which is the process by which a private company goes public by selling its shares to the public for the first time.