What Is the Risk Premium for the Following Returns If

question 248

Multiple Choice

What is the risk premium for the following returns if the risk-free rate is 5%?

• A) 0.085
• B) 0.100
• C) 0.125
• D) 0.135
• E) 0.175

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Definitions:

Authorization

Official permission or approval for an action.

Business Judgement Rule

A legal principle that protects corporate directors and officers when making business decisions, assuming they act in good faith and in the best interest of the corporation.

Officers

Individuals appointed by a company's board of directors who are responsible for managing the daily operations and executing the strategic plans of the corporation.

Directors

Individuals elected by shareholders to oversee and make policy decisions for a corporation, setting its strategic direction and ensuring governance.