Which One of the Following Represents the Amount of Compensation

question 87

Multiple Choice

Which one of the following represents the amount of compensation an investor should expect to receive for accepting the unsystematic risk associated with an individual security?

• A)Security beta multiplied by the market rate of return
• B)Market risk premium
• C)Security beta multiplied by the market risk premium
• D)Risk-free rate of return
• E)Zero

Understand the causes and effects of economic recessions and depressions in U.S. history.

Recognize the role of governmental policies in shaping economic outcomes.

Analyze the impact of major events, such as wars and technological advancements, on the U.S. economy.

Describe the evolution of U.S. economic growth and development over time.

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Definitions:

Expected Rate

The anticipated rate of return on an investment, factoring in known variables and risk assessments.

Capital Market Line

A line in the risk-return space representing the risk-return combination available to investors from a risk-free asset and market portfolio of risky assets.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, often represented by the yield on government bonds.

Standard Deviation

Square root of the variance.