The Two Factor Model on a Share Provides a Risk

question 7

Multiple Choice

The two factor model on a share provides a risk premium for exposure to market risk of 12%, a risk premium for exposure to silver commodity prices of 3.5% and a risk-free rate of 4.0%. What is the expected return on the share?

• A)11.6%
• B)13.0%
• C)15.3%
• D)19.5%

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Definitions:

Electronic Exchange

A platform or system that facilitates the trading of financial instruments, commodities, or other products through electronic systems without the need for physical trading floors.

Sell-Side Marketplace

B2B model in which organizations sell to other organizations from their own private e-marketplace or from a third-party site.

Cyber-Squatting

The practice of registering, selling, or using a domain name with the intent of profiting from the goodwill of a trademark belonging to someone else.

Domain Names

The name assigned to an Internet site, which consists of multiple parts, separated by dots, that are translated from right to left.