The Risk Premium of a Financial Asset Is the

question 53

Multiple Choice

The risk premium of a financial asset is the

• A)additional price that must be paid for riskier investments.
• B)rate that compensates for risk.
• C)rate that compensates for the risk of inflation.
• D)same as the discount rate.

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Definitions:

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Personal Representative

is an individual appointed to manage the estate of a deceased person, including distributing assets to beneficiaries.

Intestate Succession

The process by which the property of a deceased person is distributed by law to heirs when that person dies without a valid will.

Heirs

Individuals legally entitled to receive property from a deceased person's estate under state intestacy laws when there is no valid will.