The Difference Between the Return on the Market and the Risk-Free

question 121

Multiple Choice

The difference between the return on the market and the risk-free return in the Capital Asset Pricing Model is known:

• A) as the market return.
• B) as the market risk premium.
• C) as the risk-free rate of return.
• D) as the security market return.

---

Definitions:

Price Level

A measure of the average prices of goods and services in an economy at a specific time.

Money Supply

The aggregate of financial assets in an economy at a specific moment, which includes cash, coins, and the deposits in checking and savings accounts.

Quantity Equation

An equation that relates the quantity of money in an economy to the level of economic activity, typically framed as MV = PQ.

Price Level

A gauge for the typical prices of products and services in an economy at a certain time.