When Astronomers Began Searching for Extrasolar Planets,they Were Surprised to Discover

question 47

Multiple Choice

When astronomers began searching for extrasolar planets,they were surprised to discover Jupiter-sized planets much closer than 1 AU to their parent stars.Why is this surprising?

• A) These planets must have formed at a larger radius where temperatures were cooler and then migrated inward.
• B) Jupiter-sized, rocky planets were thought to be uncommon in other solar systems.
• C) These planets must be the remnants of failed stars.
• D) Earth-like planets must be rarer than Jupiter-sized planets in other solar systems.

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Definitions:

Expected Risk Premium

The additional return over the risk-free rate that investors demand to compensate for the risk of holding a risky asset.

Systematic Risk Principle

The concept that an investor can reduce the overall risk of an investment portfolio through diversification, except for inherent market risks that cannot be diversified away.

Efficient Markets Hypothesis

The efficient markets hypothesis is an investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.

Security Market Line

A representation in finance that shows the relationship between risk and return of a market.