If a Portfolio Had a Return of 10%,the Risk Free

question 18

Multiple Choice

If a portfolio had a return of 10%,the risk free asset return was 4%,and the standard deviation of the portfolio's excess returns was 25%,the risk premium would be _____.

• A)14%
• B)6%
• C)35%
• D)21%
• E)29%

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Definitions:

Control Variable

A variable that is kept constant during a scientific experiment to ensure that any changes in the outcome can be attributed to the variables being tested.

Confounding Variable

A variable that influences both the dependent variable and independent variable, causing a spurious association.

Dependent Variable

The variable in an experiment that is expected to change as a result of manipulations of the independent variable.

Positive Correlation

An association between increases in one variable and increases in another—or between decreases in one and in another.