In a Year in Which Common Stocks Offered an Average

question 83

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%.

---

Definitions:

Condition Precedent

A condition precedent is a condition or event that must occur before a party is required to perform a contractual obligation or before a contract becomes effective.

Contractual Obligation

A legal duty borne out of a contract, requiring a party to act or refrain from acting in a certain way.

Uncertain Future Event

An uncertain future event is an event or occurrence that may or may not happen, impacting plans, decisions, and outcomes depending on its eventual realization or lack thereof.

Quasi-contract

A legal concept where a court enforces an obligation on parties as if a contract existed, to prevent unjust enrichment.