If a Portfolio Had a Return of 12%, the Risk-Free

question 41

Multiple Choice

If a portfolio had a return of 12%, the risk-free asset return was 4%, and the standard deviation of the portfolio's excess returns was 25%, the risk premium would be

• A) 8%.
• B) 16%.
• C) 37%.
• D) 21%.
• E) 29%.

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Definitions:

Legal Action

The process of seeking judicial intervention to enforce or protect a right through a lawsuit or other legal means.

Surety

A guarantee, typically by a third party, ensuring the fulfillment of an obligation or the performance of a contract.

Guarantor

An individual or entity that agrees to be responsible for another's debt or performance under a contract if the original party fails to meet their obligations.

Lienholder's Claim

The right of a creditor to retain possession of a debtor's property until the debt is settled.