Which of the Following Will Increase the Expected Risk Premium

question 39

Multiple Choice

Which of the following will increase the expected risk premium for a security, all else constant?
I. an increase in the security's expected return
II. a decrease in the security's expected return
III. an increase in the risk-free rate
IV. a decrease in the risk-free rate

• A)I only
• B)III only
• C)IV only
• D)I and IV only
• E)II and III only

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Definitions:

Photographic Memory

A rare ability to recall images, sounds, or objects in great detail after only a few instances of exposure, without using mnemonics.

Classical Conditioning

A type of learning in which we link two or more stimuli; as a result, to illustrate with Pavlov’s classic experiment, the first stimulus (a tone) comes to elicit behavior (drooling) in anticipation of the second stimulus (food).

Implicit Memories

Memories that are not consciously recalled but influence behaviors and knowledge, such as procedural memory for tasks.

Echoic Memory

A subtype of sensory memory that retains auditory information, allowing sounds to be remembered for a short period after they are heard.