The Excess Return Earned by an Asset That Has a Beta

question 78

Multiple Choice

The excess return earned by an asset that has a beta of one over that earned by a risk-free asset is referred to as the

• A)market rate of return.
• B)systematic return.
• C)real rate of return.
• D)market risk premium.
• E)total return.

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Definitions:

Average Net Property

This term typically refers to the average value of a company's property, plant, and equipment net of depreciation, over a certain period of time.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Estimated Useful Life

The expected period over which a company anticipates deriving benefits from an asset before it becomes obsolete or too costly to maintain.

Units-Of-Production Depreciation

A depreciation method that allocates the cost of an asset over its useful life based on its output or usage rather than the passage of time.