The Amount by Which the Expected Return on a Risky

question 106

Multiple Choice

The amount by which the expected return on a risky asset exceeds the return on an otherwise comparable safe asset is known as the

• A)CDS spread.
• B)risk premium.
• C)VIX.
• D)term spread.

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Definitions:

Consume

The use of goods and services by households or individuals, typically referring to the act of buying and using products.

Harvest

The process of gathering mature crops from the fields.

Grain

Small, hard seeds, especially the seeds of various food plants such as wheat, corn, rye, oats, and barley.

Real Interest Rate

The real interest rate adjusts the nominal interest rate to remove the effects of inflation, reflecting the true cost of borrowing or the real yield on savings.