An Investment in Common Stock Carries a Higher Return Than

question 85

Multiple Choice

An investment in common stock carries a higher return than a bank certificate of deposit. The difference in returns is called:

• A)the risk-free rate.
• B)the real rate of return.
• C)the risk premium.
• D)the beta.
• E)None of the above

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service supplied is equal to the quantity demanded.

Food Stamps

Government-issued vouchers used to purchase groceries by individuals and families in need, part of a social assistance program.

Supply And Demand Analysis

An economic model used to understand the pricing and quantity of goods in a market by examining how the availability of a product (supply) and the desire for it (demand) interact.

Demand Curve

The demand curve is a graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers within a given period.