Which One of the Following Statements Is Correct

question 2

Multiple Choice

Which one of the following statements is correct?

• A)The risk premium on a risk-free security is generally considered to be one percent.
• B)The expected rate of return on any security, given multiple states of the economy, must be positive.
• C)There is an inverse relationship between the level of risk and the risk premium given a risky security.
• D)If a risky security is correctly priced, its expected risk premium will be positive.
• E)If a risky security is priced correctly, it will have an expected return equal to the risk-free rate.

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