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:

Contribution Margin

The amount remaining from sales revenue after all variable expenses have been deducted, indicating how much contribution towards covering fixed costs and generating profit.

Variable Costs

Expenses that vary directly with the level of production or sales volume.

Selling Price

The price at which a product or service is offered for sale to consumers.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the profitability of a company's core activities.