Risk Premium Is

question 31

Multiple Choice

Risk premium is

• A)a payment differential necessary to compensate the investor for having to bear a risk.
• B)the additional payment paid by bonds issued by the federal government.
• C)the tendency of some investors to incur in high risk.
• D)the benefits of buying from a trustworthy institution.

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Definitions:

Gasoline

A volatile, flammable liquid derived from petroleum, primarily used as fuel in internal combustion engines.

Copper

A reddish-brown metal that is highly conductive to electricity and heat, extensively used in electrical wiring and plumbing.

Perfectly Competitive Market

Market with many buyers and sellers, so that no single buyer or seller has a significant impact on price.

Market Price

The current price at which an asset or service can be bought or sold in the market.