The Excess Return Is Computed as The

question 25

Multiple Choice

The excess return is computed as the:

• A)return on a security minus the inflation rate.
• B)return on a risky security minus the risk-free rate.
• C)risk premium on a risky security minus the risk-free rate.
• D)the risk-free rate plus the inflation rate.
• E)risk-free rate minus the inflation rate.

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Definitions:

Homeowner's Policy

An insurance policy that provides coverage for damage to one's home and belongings inside, along with liability for accidents that occur on the property.

Annual Profit

The financial gain made by a business over the course of a year, calculated as total revenue minus total expenses.

Insurance Company

A business that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment, or hardship in exchange for premium payments.

Standard Deviation

An indicator of the spread or diversity within a dataset, showing to what extent the individual numbers deviate from the dataset's average.