Over the Long-Term,which One of the Following Is a Correct

question 70

Multiple Choice

Over the long-term,which one of the following is a correct statement concerning risk premium?

• A)The lower the volatility of returns,the greater the risk premium.
• B)Stocks tend to have a higher risk premium than bonds.
• C)The lower the rate of return,the greater the risk premium.
• D)The risk premium does not affect the rate of return.
• E)The risk premium varies by the same percentage rate as the inflation rate.

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Definitions:

Inventory

Inventory comprises goods and materials that a business holds for the purpose of resale, manufacturing, or production.

Amortization of Premium

The gradual recognition in income statements of the excess amount paid over the face value of bonds over the bond's life.

Bonds Payable

Bonds payable refers to the amount a company owes to bondholders and must repay at maturity date, often including regular interest payments.

Accounts Receivable

Outstanding payments from customers to a firm for goods or services that have already been received or utilized but have not yet been settled.