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:

Cohorts

Groups of people who share a common characteristic or experience within a defined period.

Decades

Periods of ten years.

Continuous

Uninterrupted in time, sequence, substance, or extent; without cessation or gaps.

Discontinuous

Characterized by interruptions or gaps, not having a steady or unbroken progression.