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

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Definitions:

Norway

A Scandinavian country known for its vast landscapes, fjords, and high living standards.

Karl Marx

A 19th-century philosopher, economist, and political theorist known for his critical theories about capitalism and his influence on the development of socialist and communist movements.

Capitalist

A person who supports or engages in the principles of capitalism, a system where trade, industries, and the means of production are largely or entirely privately owned and operated for profit.

Invisible Hand

A metaphor introduced by Adam Smith to describe the self-regulating nature of the market economy driven by individuals' pursuit of their own interests.