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:

Dividend Payments

Cash payments made by a company to its shareholders, often as a distribution of profits.

Treasury Stock

Shares that were once a part of the outstanding shares and have been bought back by the company.

Authorized Shares

The highest amount of shares a company is allowed to distribute, as outlined in its charter.

Outstanding Shares

The total number of shares of a corporation that have been issued and are in the hands of the public and insiders.