The Excess Return Earned by a Risky Asset,for Example with a Beta

question 14

Multiple Choice

The excess return earned by a risky asset,for example with a beta of 1.4,over that earned by a risk-free asset is referred to as a:

• A) market risk premium.
• B) risk premium.
• C) systematic return.
• D) total return.
• E) real rate of return.
• F) None of the above.

Recognize the implications of cash management decisions on a firm's opportunity costs and how it influences overall financial strategy.

Understand the physiological mechanisms that regulate hunger and satiety.

Recognize the role of emotion and the brain's functions in influencing human behavior and motivation.

Identify the limitations and implications of polygraph tests in detecting lies.

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Definitions:

Required Reserve Ratio

The percentage of deposits that banks must hold in reserve and not lend out to ensure liquidity.

Transfer Payments

Financial distributions by the government to individuals without any expectation of a good or service being provided in return.

Government Securities

Financial instruments issued by a government to borrow money from investors with a promise to pay back with interest.

Recessionary Gap

A situation in macroeconomics where the actual output of an economy is less than its potential output, leading to unemployment and underutilized resources.