The Risk Premium for Common Stocks

question 27

Multiple Choice

The risk premium for common stocks

• A)cannot be zero,for investors would be unwilling to invest in common stocks.
• B)must always be positive,in theory.
• C)is negative,as common stocks are risky.
• D)A and B.
• E)A and C.

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Definitions:

Expected Frequency

The theoretical frequency of an event or category estimated from a probability distribution or sample data.

Groups

Sets of subjects or items that are classified together based on shared characteristics or for purposes of an experiment or study.

Total N

The total number of observations, subjects, or participants included in a study or experiment.

Degrees Of Freedom

The number of independent pieces of information on which a statistical estimate is based, minus the number of parameters estimated.