Which One of the Following Represents the Amount of Compensation

question 87

Multiple Choice

Which one of the following represents the amount of compensation an investor should expect to receive for accepting the unsystematic risk associated with an individual security?

• A)Security beta multiplied by the market rate of return
• B)Market risk premium
• C)Security beta multiplied by the market risk premium
• D)Risk-free rate of return
• E)Zero

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Definitions:

Capital Expenditure

Capital utilized by a firm for the procurement or refurbishment of solid assets including real estate, production plants, or hardware.

Plant Assets

Long-term tangible assets that are used in the production of goods and services, such as machinery, buildings, and equipment.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting wear and tear, obsolescence, or age.

Notes Receivable

Written promises for amounts to be received, typically including interest, by a debtor to a creditor.