The Excess Return Earned by an Asset That Has a Beta

question 59

Multiple Choice

The excess return earned by an asset that has a beta of 1.0 over that earned by a risk-free asset is referred to as the:

• A)market rate of return.
• B)market risk premium.
• C)systematic return.
• D)total return.
• E)real rate of return.

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Definitions:

Sugar Pill

A placebo used in clinical trials, a harmless pill given to participants for psychological effect rather than for a medical effect.

Control Group

In experimental research, a group of subjects that does not receive the treatment or intervention being studied and is used as a benchmark to measure the effects of that treatment.

Experimental Group

In research, the group of participants that receives the treatment or intervention being tested, contrasted with the control group.

Independent Variable

The variable that is intentionally changed or manipulated in an experiment to observe its effect on the dependent variable.