The Risk- Free Rate Is Equal to the Real Rate

question 16

Multiple Choice

The risk- free rate is equal to the real rate of return plus

• A) a risk premium.
• B) the prevailing prime rate.
• C) an expected inflation premium.
• D) both an inflation and a risk premium.

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Definitions:

Proposition

A proclamation that asserts a judgment or opinion.

Compound Proposition

A statement formed by combining two or more propositions using logical connectors (like and, or, not), resulting in a proposition with a more complex structure.

Complete Propositions

Statements or assertions that convey a complete idea, capable of being true or false, and usually containing both a subject and a predicate.

Inclusive Sense

Refers to an understanding or interpretation that aims to encompass or include all relevant aspects or elements.