Which of the Following Is a True Statement

question 395

Multiple Choice

Which of the following is a true statement?

• A) To calculate the expected risk premium one needs the expected return on the risky asset and the return on a risk-free asset.
• B) The risk premium is the difference between the return on a risky asset and the return on the market portfolio.
• C) The expected return on an asset is equal to the sum of the possible returns divided by their probabilities.
• D) Comparison of two different risky assets cannot be simplified by calculating the expected return for each.
• E) Expected returns depend on the states of the economy but not the associated probabilities.

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