Which of the Following Will Increase the Expected Risk Premium

question 39

Multiple Choice

Which of the following will increase the expected risk premium for a security, all else constant?
I. an increase in the security's expected return
II. a decrease in the security's expected return
III. an increase in the risk-free rate
IV. a decrease in the risk-free rate

• A)I only
• B)III only
• C)IV only
• D)I and IV only
• E)II and III only

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Definitions:

Aggregate Demand

The total demand for all goods and services in an economy at different price levels, during a specific time period.

Value of Money

The purchasing power of currency, indicating the amount of goods or services that can be bought with a unit of money.

Quantity of Money

The total amount of money available in an economy at a specific time, including cash, coins, and balances in bank accounts.

Circulation

In economics, circulation refers to the continuous movement and exchange of money or goods and services within an economy.