The Markets in General Are Paying a 2% Real Rate

question 81

Multiple Choice

The markets in general are paying a 2% real rate of return. Inflation is expected to be 3%. ABC share commands a 6% risk premium. What is the expected rate of return on ABC share?

• A) 11%.
• B) 5%.
• C) 8%.
• D) 2%.

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Definitions:

F-ratio

A statistic used in ANOVA to compare the variance among group means to the variance within groups; it assesses whether the means are significantly different.

Variability

A statistical measure that indicates the extent to which data points in a dataset differ from the average value.

F-ratio

The ratio of variance between groups to the variance within groups in an ANOVA test, used to determine if there are any significant differences between group means.

Denominator

The bottom part of a fraction that indicates into how many parts the whole is divided.