In a Year in Which Common Stocks Offered an Average

question 63

Multiple Choice

In a year in which common stocks offered an average return of 18%, Treasury bonds offered 10%, and Treasury bills offered 7%. The risk premium for common stocks was:

• A) 1%.
• B) 3%.
• C) 8%.
• D)11%.

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Definitions:

Divisible Contract

An agreement comprising multiple promises or parts that can be separated and independently executed or enforced.

Consideration

Something of value exchanged between parties in a contract, making the agreement legally binding.

Enforceable Contract

A legally binding agreement capable of being upheld and imposed in a court of law.

Competition

The rivalry among businesses to attract customers, increase sales, and improve market share.