When Treasury Bills Yield 7% and the Expected Return on the Market

question 39

Multiple Choice

When Treasury bills yield 7% and the expected return on the market is 16%,then the risk premium on an asset is equal to:

• A) 9%.
• B) 16%.
• C) 9% times the asset's beta.
• D) 9% plus the risk-free rate.

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Definitions:

Exact Period

A specific timeframe during which certain actions are to take place or conditions must be met.

Offer Open

A proposal made in business or negotiations that remains valid for acceptance until a specified date or until withdrawn by the proposer.

Sailboat Sale

The transaction process involved in transferring ownership of a sailboat from one party to another.

Counteroffer

A response to an offer in which the original terms are rejected and new terms are proposed, forming part of the negotiation process.