The Risk Premium Is Defined as the Rate of Return

question 44

Multiple Choice

The risk premium is defined as the rate of return on:

• A)a risky asset minus the risk-free rate.
• B)the overall market.
• C)a U.S. Treasury bill.
• D)a risky asset minus the inflation rate.
• E)a riskless investment.

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Definitions:

Government Activities

Actions and operations conducted by the government including lawmaking, regulation, and public services.

Externality Rights

The rights pertaining to external effects of transactions, that affect third parties not directly involved in the economic transaction.

Government Imposed Taxes

Charges levied by the government on individuals, goods, services, or transactions to fund public expenditures.

Marginal Social Cost

The total cost to society of producing an additional unit of a product, including both the private cost and any external costs.