Which One of the Following Measures Risk Premium in Relation

question 11

Multiple Choice

Which one of the following measures risk premium in relation to systematic risk?

• A)Value-at-Risk
• B)Jensen's alpha
• C)beta
• D)Sharpe ratio
• E)Treynor ratio

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Definitions:

Required Return

The minimum annual percentage earned by an investment that will entice individuals or companies to put their money into it.

Risk-free Rate

The return on an investment with zero risk; typically represented by the yield on government bonds.

Risk Characteristics

Features that define the vulnerability of an investment's return, including volatility, market risk, and credit risk.

Systematic Risk

The risk inherent to the entire market or market segment, also known as "market risk," which cannot be reduced through diversification.