Since the Market Return Represents the Return on an Average

question 27

True/False

Since the market return represents the return on an average stock, that return carries risk with it. As a result, there exists a market risk premium which is the amount over and above the risk-free rate that is required to compensate an investor for assuming an average amount of risk.

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Definitions:

Grit

A personal quality of determination, perseverance, and the ability to maintain effort toward attaining a goal over a long period.

Perseverance

Persistent determination to continue with a course of action in spite of difficulties, obstacles, or previous failures.

Resilience

The capacity to recover quickly from difficulties; toughness.

Empathy

The capacity to understand or feel what another person is experiencing from within their frame of reference.