The Risk Premium for an Individual Security Is Equal to The

question 16

Multiple Choice

The risk premium for an individual security is equal to the:

• A)beta times the market return.
• B)difference between the market return and the risk free rate times the security's beta.
• C)weighted average of the individual security betas in a portfolio.
• D)the security's variance divided by the variance of the market.

---

Definitions:

Horizontal Analysis

A financial analysis technique that compares historical financial information over a series of reporting periods to identify trends and growth patterns.

Income Statement

A financial document that reports a company's financial performance over a specific accounting period, detailing revenues and expenses to show net income or loss.

Net Income

The total earnings of a company after deducting all expenses, taxes, and losses from total revenue.

Percentage Increase

A measure of how much a quantity has grown, typically expressed as a fraction of the starting value.