The Expected Risk Premium on a Stock Is Equal to the Expected

question 75

Multiple Choice

The expected risk premium on a stock is equal to the expected return on the stock minus the:

• A) expected market rate of return.
• B) risk-free rate.
• C) inflation rate.
• D) standard deviation.
• E) variance.

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Definitions:

Net Asset Value

The total value of a fund's assets minus its liabilities, often used in the context of mutual funds to determine the per share market value.

Dividend Income Distributions

These are payments made by a corporation to its shareholders, usually derived from the company's earnings.

Capital Gains

The increase in value of an asset or investment above its purchase price, realized when the asset is sold.

NAV

Net Asset Value (NAV) represents the per-share market value of all the securities held by a mutual fund, ETF, or similar investment vehicle, calculated by subtracting the fund's liabilities from its assets and dividing by the number of shares outstanding.