Assume That Last Year T-Bills Returned 2

question 4

Multiple Choice

Assume that last year T-bills returned 2.8 percent while your investment in large-company stocks earned an average of 7.6 percent. Which one of the following terms refers to the difference between these two rates of return?

• A) Risk premium
• B) Geometric average return
• C) Arithmetic average return
• D) Standard deviation
• E) Variance

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Definitions:

Adrenal

Relating to the adrenal glands, which are small glands located above the kidneys responsible for producing hormones that regulate metabolism, immune system, blood pressure, and stress responses.

Sex Hormones

Biological compounds that play a crucial role in sexual development, reproduction, and secondary sexual characteristics.

Androgens

A group of hormones that play a role in male traits and reproductive activity; includes testosterone.

Testes

The male reproductive glands that produce sperm and hormones, including testosterone.