If a Portfolio Had a Return of 11%, the Risk-Free

question 18

Multiple Choice

If a portfolio had a return of 11%, the risk-free asset return was 6%, 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) 5%.

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Definitions:

Promoters

Individuals or companies that undertake the preliminary activities of organizing or setting up a new business or venture.

Preincorporation Contract

An agreement made by the promoters of a company before it is legally incorporated.

Liable

Having legal responsibility or obligation.

Articles of Incorporation

A document filed with a state government to legally document the creation of a corporation.