The Excess Return You Earn by Moving from a Relatively

question 25

Multiple Choice

The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the:

• A) Geometric average return.
• B) Inflation premium.
• C) Risk premium.
• D) Time premium.
• E) Arithmetic average return.

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Definitions:

Nominal Data

Data categorized without a natural order or ranking, distinguished merely by name.

Binomial Experiment

A statistical experiment that adheres to the following criteria: fixed number of trials, only two possible outcomes, constant probability of success, and independence between trials.

Chi-squared Distribution

A statistical distribution used extensively in hypothesis testing, particularly in tests of independence and goodness-of-fit.

Contingency Table

A table used in statistics to show the distribution of one variable in rows and another in columns, useful for analyzing the relationship between two categorical variables.