The Excess Return You Earn by Moving from a Relatively

question 30

Multiple Choice

The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the:

• A) geometric average return.
• B) inflation premium.
• C) risk premium.
• D) time premium.
• E) arithmetic average return.

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Definitions:

Long-Term Assets

Assets owned by a company that have a useful life of more than one year, such as property, plant, and equipment.

Current Assets

Current assets are assets that are expected to be converted into cash, sold or consumed within a year or within the normal operating cycle of the business, such as cash, inventory, and receivables.

Installation

refers to the process of setting up and configuring equipment or software to make it ready for use.

Repairs

Expenditures to restore or maintain an asset in its normal operating condition without significantly improving its life or value.