Which One of the Following Is the Computation of the Risk

question 21

Multiple Choice

Which one of the following is the computation of the risk premium for an individual security? E(R) is the expected return on the security, R_f is the risk-free rate, β is the security's beta, and E(R_M) is the expected rate of return on the market.

• A)E(R_M) -R_f
• B)E(R) - E(R_M)
• C)E(R) - [E(R_M) + R_f]
• D)β[E(R_M) - R_f]
• E)β [E(R) - R_f]

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Definitions:

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A group of brightly colored frogs that are known for their powerful toxins, which indigenous people have used on the tips of arrows or darts for hunting.

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Ecotone

The transition zone where two communities meet and intergrade.

Transitional Zone

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