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%

---

Definitions:

Comorbidity

The presence of two or more diseases or medical conditions in a patient at the same time.

Psychological Disorder

A pattern of behavioral or psychological symptoms that impact multiple areas of life and cause distress.

Placebo Effect

A phenomenon in which a person experiences a physical or psychological improvement after taking a substance with no therapeutic effect.

Diagnostic Test

Procedures used to identify and determine the cause of disease or disorder in an individual.