The Excess Return Earned by an Asset That Has a Beta

question 60

Multiple Choice

The excess return earned by an asset that has a beta of 1.34 over that earned by a risk-free asset is referred to as the:

• A) market risk premium.
• B) risk premium.
• C) systematic return.
• D) total return.
• E) real rate of return.

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Definitions:

Logic

The systematic study of correct reasoning and inference, often applied in computing to carry out processes based on conditions and rules.

Efficient Market Hypothesis

A theory that suggests market prices fully reflect all available information, making it impossible to consistently achieve higher than average returns.