The Risk Premium for Common Stocks

question 24

Multiple Choice

The risk premium for common stocks

• A) cannot be zero,for investors would be unwilling to invest in common stocks.
• B) must always be positive,in theory.
• C) is negative,as common stocks are risky.
• D) a and b.
• E) a and c.

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Definitions:

Fear Reaction

The immediate response to a perceived threat, involving physiological changes that prepare the body to either fight or flee.

Stimulus Generalisation

The process by which a conditioned response (CR) starts occurring in response to stimuli that are similar, but not identical, to the original conditioned stimulus (CS).

Stimulus Generalisation

The tendency for a response that has been conditioned to one stimulus to be elicited by similar stimuli.

Stimulus Discrimination

The learned ability to distinguish between a conditioned stimulus and other stimuli that do not signal an unconditioned stimulus.