The Risk Premium Is Computed by ________ the Average Rate

question 14

Multiple Choice

The risk premium is computed by ________ the average rate of return for an investment.

• A)subtracting the inflation rate from
• B)adding the inflation rate to
• C)subtracting the average return on U.S.Treasury bills from
• D)adding the average return on U.S.Treasury bills to
• E)subtracting the average return on long-term government bonds from

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Definitions:

Allocate Resources

The process of distributing available resources among various projects or business units.

Markets

Places or systems in which goods, services, and assets are exchanged, usually with prices determined by supply and demand.

Efficiently

Conducting an activity in such a manner that it achieves the maximum output with the minimum input or resources, without waste.

Rival

An entity competing against another for the same objective or for superiority in the same field of activity.